Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”)
is entered into by and between HERITAGE COMMERCE CORP, a California bank
holding company (the “Company”),
HERITAGE BANK OF COMMERCE, a California banking corporation (the “Bank”), and Dan T. Kawamoto, an individual (the “Executive”) as of June 11, 2009 and shall become
effective on July 13, 2009 (the “Effective Date”).

 

RECITALS

 

WHEREAS, the Company is a California corporation and a
bank holding Company registered under the Bank Holding Company Act of 1956, as
amended, subject to the supervision and regulation of the Board of Governors of
the Federal Reserve System,

 

WHEREAS, the Company is the parent holding company for
the Bank, which is a California banking association, subject to the supervision
and regulation of the California Department of Financial Institution and the
Federal Reserve Board,

 

WHEREAS, the Board of Directors of the Company and the
Bank has approved and authorized the entry into this Agreement with the Executive;
and

 

WHEREAS, the parties desire to enter into this
Agreement to set forth the terms and conditions for the employment relationship
of the Executive with the Company and the Bank.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the promises and mutual covenants and agreements herein
contained and intending to be legally bound hereby, the Company, the Bank and
the Executive hereby agree as follows:

 

1.                                       Employment.

 

1.1                                Title.  The Executive
is employed as Executive Vice President/Chief Administrative Officer of the
Company and the Bank.  In this capacity,
the Executive shall have such duties and responsibilities as may be designated
to him by the Chief Executive Officer of the Company and in accordance with the
objectives or policies of the Board of Directors, from time to time, in
connection with the business activities of the Company and the Bank.

 

1.2                                Devotion to Bank Business. 
The Executive shall devote his full business time, ability, and
attention to the business of the Company and the Bank during the term of this
Agreement and shall not during the term of this Agreement engage in any other
business activities, duties, or pursuits whatsoever, or directly or indirectly
render any services of a business, commercial, or professional nature to any
other person or organization, whether for compensation or otherwise, without
the prior written consent of the Board of Directors of the Company and the
Bank.  It shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements
or teach at educational institutions and (C) manage personal investments,
so long as 

 

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such activities do not
significantly interfere with the performance of the Executive’s
responsibilities as an employee of the Company and the Bank in accordance with
this Agreement.  Nothing in this
Agreement shall be interpreted to prohibit the Executive from making passive
personal investments.  However, the
Executive shall not directly or indirectly acquire, hold, or retain any
interest in any business competing with or similar in nature to the business of
the Bank and the Company, except as permitted by Company policies or authorized
by the Chief Executive Officer of the Company.

 

1.3                                Standard.  The Executive
will set a high standard of professional conduct given his role with the
Company and the Bank and his responsibility relative to the Bank’s presence and
stature in the community.  The Executive
will, at all times, emulate this high professional standard of conduct in order
to develop and enhance the Company’s and the Bank’s reputation and image.  The Executive’s and his family’s eligibility
and all other terms and conditions of the Executive’s participation in the Bank’s
or Company’s benefit, insurance and disability plans and programs will be
governed by the official plan documents which may change from
year-to-year.  Notwithstanding the
foregoing, at a minimum the Executive shall be entitled to the same benefits as
all other executives in comparable positions with the Company and the
Bank.  The Executive will comply with all
applicable rules, policies and procedures of the Bank and any of its subsidiaries
and all pertinent regulatory standards as may affect the Company and the Bank
and the Company.

 

1.4                                Location.  The Executive
shall provide services for the Company and the Bank at the Company’s principal
executive offices located in San Jose California.  The Executive agrees that the Executive will
be regularly present at the Company’s principal executive offices and that the
Executive may be required to travel from time to time in the course of
performing the Executive’s duties for the Company and the Bank.

 

1.5                                No Breach of Contract.  
The Executive hereby represents to the Company and the Bank that:  (i) the execution and delivery of this
Agreement by the Executive and the performance by the Executive of the
Executive’s duties hereunder shall not constitute a breach of, or otherwise
contravene, the terms of any other agreement or policy to which the Executive
is a party or by which he is otherwise bound; (ii) that the Executive has
no information (including, without limitation, confidential information or
trade secrets) of any other person or entity which the Executive is not legally
and contractually free to disclose the Company and the Bank; and (iii) that
the Executive is not bound by any confidentiality, trade secret or similar
agreement (other than this Agreement) with any other person or entity.

 

2.                                       Term.  The term of
this Agreement shall be a period of one (1) year from the Effective Date,
subject to the termination provisions of Section 6.  Upon the occurrence of the first annual
anniversary of the Effective Date, and on each anniversary date thereafter, the
term of this Agreement shall be deemed automatically extended for an additional
one (1) year term, subject to the termination provisions of Section 6.

 

3.                                       Compensation.

 

3.1                                Salary.  The Executive
shall receive a salary at an annual rate of $240,000 which will be paid in
accordance with the Bank’s normal payroll procedures including applicable 

 

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adjustments for
withholding taxes.  The Executive shall
receive such annual increases in salary, if any, as may be determined by the
Company’s Board of Directors annual review of the Executive’s compensation each
year during the term of this Agreement. 
Participation in deferred compensation, discretionary or performance
bonus, retirement, stock option and other employee benefit plans and in fringe
benefits shall not reduce the annual rate.

 

3.2                                Incentive Compensation. 
The Executive shall be entitled to receive an annual incentive
compensation payment pursuant to the terms of the Heritage Commerce Corp
Management Incentive Compensation Plan in effect at the date of this Agreement
and as amended at any future date or pursuant to any successor incentive plan
or arrangement adopted by the Bank or the Company for its officers (the “Incentive Plan”). 
Notwithstanding any terms of the Incentive Plan to the contrary, an
annual payment under the Incentive Plan for a fiscal year shall be paid to the
Executive no later than the 15th day of the third month following the end of
the calendar year in which the annual incentive compensation payment is no
longer subject to a substantial risk of forfeiture.  Except as set forth in the Incentive Plan or
this Agreement, or in any successor incentive plan or arrangement, no incentive
compensation payments shall be prorated for a partial year during the year
Executive terminates his employment and the Executive shall not be entitled to
receive incentive compensation payments for any year during the term of this
Agreement in which Executive was not employed by the Bank or the Company for
the full fiscal year (not including his initial year of employment).

 

3.3                                2004 Equity Plan. 
The Executive will receive a nonqualified Stock Option grant of 25,000
shares of Common Stock pursuant to the terms of the Company’s Amended and
Restated 2004 Equity Plan (the “2004 Plan”).  The exercise price will be the Fair Market
Value for the Company’s Common Stock on the date of grant as defined in the
2004 Plan.  The Executive’s options will
vest in daily increments of 1/1460th from the date of grant until fully vested
and shall expire ten years from the date of grant.  All such options shall be subject to the
terms and conditions of the 2004 Plan and shall be conditioned upon the
Executive’s execution of an option agreement with the Company in a form
specified by the Company.

 

3.4                                Other Benefits. 
The Executive shall be entitled to those benefits adopted by the Bank
and the Company for all officers of the Bank, subject to applicable
qualification requirements and regulatory approval requirements, if any.  To the extent that the level of such benefits
is based on seniority or compensation levels, the Company and the Bank shall
make appropriate and proportionate adjustments to the Executive’s
benefits.  The Executive shall be further
entitled to the following additional benefits which shall supplement or
replace, to the extent duplicative of any part or all of the general officer
benefits, the benefits otherwise provided to the Executive:

 

(a)                                  Vacation.  The Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and the Bank as in effect for
the Executive or for other executives in comparable positions with the Company
and the Bank; provided, however, that the Executive shall be entitled to earn
paid vacation at the rate of not less than 25 days vacation days for each
calendar year (reduced pro rata for any partial year), of which at least 10
days (reduced pro rata for any partial year) must be taken consecutively.  Vacation may be accrued in accordance with
the Company’s policy.  The 

 

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date or dates of vacation
shall be determined by the Executive and the Company’s Chief Executive Officer,
and will be subject to the Company and the Bank’s business requirements.

 

(b)                                 Automobile Allowance and Insurance. 
The Bank or the Company will pay to the Executive an automobile
allowance in the amount of $700 per month during the term of this
Agreement.  The Bank or the Company shall
also reimburse the Executive for gasoline expenditures and up to $2,400 per
year for automobile maintenance and repairs related to use of the automobile
acquired or used by the Executive upon presentation and approval of receipts,
invoices or other appropriate evidence of such expense in accordance with the
policies of the Bank or the Company.  The
Executive shall acquire or otherwise make available for his business and
personal use an automobile suitable to his position and maintain it in good
condition and repair.  The Executive
shall obtain and maintain public liability insurance and property damage
insurance policies with insurer(s) acceptable to the Bank and the Company
and with such coverages in such amounts as may be acceptable to the Bank and
the Company from time to time.  The Bank
or the Company may elect to provide and pay for such insurance policies in lieu
of the Executive maintaining such policies.

 

(c)                                  Insurance.  The Bank or
the Company shall provide during the term of this Agreement at no cost to the
Executive group life, health (including medical, dental, vision and
hospitalization), accident and disability insurance coverage for the Executive
and his dependents through a policy or policies provided by the insurer(s) selected
by the Bank or the Company in their sole discretion on the same basis as all
other executives in comparable positions with the Bank.

 

(d)                                 401(k).  The Company
maintains a 401(k) plan for its eligible employees.  Subject to the terms and conditions set forth
in the official plan documents, the Executive will be eligible to participate
in the 401(k) plan, and shall receive a matching contribution in
accordance with the terms of the 401(k) plan from the Company.

 

(e)                                  Employee Stock Ownership Plan. 
The Executive will be eligible to participate in the Company’s Employee
Stock Ownership Plan (“ESOP”), subject
to the terms and conditions of the ESOP.

 

3.5                                Business Expenses; Memberships. 
The Executive shall be entitled to incur and be reimbursed for all
reasonable business expenses.  The
Company and the Bank agree that they will reimburse the Executive for all such
expenses upon the presentation by the Executive, from time to time, of an
itemized account of such expenditures setting forth the date, the purposes for which
incurred, and the amounts thereof, together with such receipts showing payments
in conformity with the Bank’s established policies.  Reimbursement shall be made within a
reasonable period after the Executive’s submission of an itemized account in
accordance with the Company’s and the Bank’s policies.

 

4.                                       Indemnity.  The Bank and
the Company shall indemnify and hold the Executive harmless from any cost,
expense or liability arising out of or relating to any acts or decisions made
by the Executive on behalf of or in the course of performing services for the
Company and the Bank to the same extent the Bank and the Company indemnifies
and holds harmless other 

 

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executive officers and
directors of the Company and the Bank and in accordance with the articles of
incorporation, bylaws and established policies of the Bank and the Company.

 

5.                                       Certain Terms Defined. 
For purposes of this Agreement:

 

5.1                                “Accrued Obligations”
means the sum of the Executive’s Base Salary and accrued vacation through the
Date of Termination to the extent not theretofore paid, outstanding expense
reimbursements and any compensation previously deferred by the Executive to the
extent not theretofore paid.

 

5.2                                “Base Salary”
means, as of any Date of Termination of employment, the highest average salary
of the Executive for any consecutive 12 months of the last 36 months preceding
such Date of Termination.

 

5.3                                “Cause” shall
mean (i) the Executive willfully breaches or habitually neglects the
duties which the Executive is required to perform under this Agreement; (ii) the
Executive commits an intentional act of moral turpitude that has a material
detrimental effect on the reputation or business of the Bank or the Company; (iii) the
Executive is convicted of a felony or commits any material and actionable act
of dishonesty, fraud, or intentional material misrepresentation in the
performance of the Executive’s duties under this Agreement; (iv) the
Executive engages in an unauthorized disclosure or use of inside information,
trade secrets or other confidential information; or (v) the Executive
willfully breaches a fiduciary duty, or violates any law, rule or
regulation, which breach or violation results in a material adverse effect on
the Company and the Bank (taken as a whole). 
If the Bank decides to terminate the Executive’s employment for Cause,
the Bank will provide the Executive with notice specifying the grounds for
termination, accompanied by a brief written statement stating the relevant
facts supporting such grounds.

 

5.4                                “Change of Control”
shall mean, subject to the limitations of Section 409A of the Code, set
forth in Section 7 of this Agreement, the earliest occurrence of one of
the following events:

 

(a)                                  the acquisition (or acquisition during
the 12 month period ending on the date of the most recent acquisition) by any
individual, entity, or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 40% or more of either (i) the then outstanding shares
of common stock of the Company (the “Outstanding the Company
Common Stock”) or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (“Outstanding Company Voting
Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change of
Control; (i) any acquisition directly from the Company, (ii) any
acquisition by the Company that reduces the number of shares issued and
outstanding through a stock repurchase program or otherwise, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or the Bank or any corporation controlled by the
Company or the Bank or (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 5.4; or

 

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(b)                                 individuals who, as of the Effective
Date, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason other than resignation,
death or disability to constitute at least a majority of the Company’s Board of
Directors during any 12 month period; provided, however, that any individual
becoming a director subsequent to the Effective Date whose election, or
nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Company’s Board of Directors; or

 

(c)                                  consummation of a reorganization, merger
or consolidation of the Company or the Bank, or sale or other disposition (in
one transaction or a series of transactions) of any assets of the Bank or the Company
having a total fair market value equal to, or more than, 40% of the total gross
fair market value of all of the assets of the Bank or the Company immediately
prior to such acquisition or acquisitions (a “Business
Combination”), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Common Stock
and Outstanding Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns all or substantially all of the Company’s or
Bank’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Common Stock and Outstanding
Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or the Bank or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the Business
Combination, and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Company’s Board of Directors at the time of the execution of the
initial agreement, or of the action of the Company’s Board of Directors,
providing for such Business Combination; or

 

(d)                                 approval by the shareholders of the
Company of a complete liquidation or dissolution of the Company.

 

5.5                                “Code” means the
Internal Revenue Code of 1986, as amended and any successor provisions to such
sections.

 

5.6                                “Change of Control Period”
shall mean the period of time (a) commencing on the earlier of (i) 120
days before the date the Change of Control occurs, or if 

 

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earlier, 120 days before
a definitive agreement is executed by the Company or the Bank for a transaction
described in Section 5.4(c) (provided, however, that in the event of
this subsection (a)(i) the Executive reasonably demonstrates that his termination
of employment should it occur was either (x) at the request of a third
party who has taken steps reasonably calculated to effect a change in control,
or (y) otherwise arose in connection with a Change in Control), or (ii) the
date the Change of Control occurs, and (b) ending on the last day of the
24th calendar month immediately following the month the Change of Control
occurred.

 

5.7                                “Date of Termination”
means (i) if the Executive’s employment is terminated due to the Executive’s
death, the Date of Termination shall be the date of death; (ii) if the
Executive’s employment is terminated due to Disability, the Date of Termination
is the Disability Effective Date; (iii) if the Executive’s employment is
terminated by the Bank or the Company for Cause, the Date of Termination is the
date on which the Bank or the Company gives notice to the Executive of such
termination; (iv) if the Executive’s employment is terminated by the Bank
or the Company without Cause or voluntarily by the Executive, the Date of
Termination shall be the date specified in the notice of termination; and (v) if
the Executive’s employment terminates for any other reason, the Date of
Termination shall be the Executive’s final date of employment.

 

5.8                                “Disability”
shall mean a physical or mental condition of the Executive which occurs and
persists and which, in the written opinion of a physician selected by the
Company or the Bank or their insurers and acceptable to the Executive or the
Executive’s legal representative, and, in the written opinion of such
physician, the condition will render the Executive unable to return to his
duties for an indefinite period of not less than 180 days.

 

5.9                                “Highest Annual Bonus”
shall mean the highest bonus or incentive compensation amount paid to (or earned
by) the Executive in any of the three (3) fiscal years (or in any shorter
number of years if the length of employment of the Executive is less than three
(3) years) immediately preceding the termination.

 

6.                                       Termination.

 

6.1                                This Agreement may be terminated for the
following reasons:

 

(a)                                  Death.  This
Agreement shall terminate automatically upon the Executive’s death.

 

(b)                                 Disability.  In the event
of the Executive’s Disability, the Company or Bank may give the Executive a
notice of termination.  In such event,
the Executive’s employment  with the
Company and the Bank and this Agreement shall terminate without further act of
the parties effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”)
provided, however, that within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive’ duties.  Unless otherwise agreed in writing between
the Executive, the Bank and the Company, the Executive shall immediately cease
performing and discharging the duties and responsibilities of his positions and
remove himself and his personal belongings from the Bank’s and the Company’s
premises.  All rights and obligations
accruing to the Executive under this Agreement shall cease 

 

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at such termination,
except that such termination shall not prejudice the Executive’s rights
regarding employment benefits which shall have accrued prior to such
termination, and any other remedy which the Executive may have at law, in
equity or under this Agreement, which remedy accrued prior to such termination.

 

(c)                                  Cause.  The Bank or
the Company may terminate the Executive’s employment and this Agreement for
Cause.  Unless otherwise agreed in
writing between the Executive, the Bank and the Company, the Executive shall
immediately cease performing and discharging the duties and responsibilities of
his positions and remove himself and his personal belongings from the Bank’s
and the Company’s premises.  All rights
and obligations accruing to the Executive under this Agreement shall cease at
such termination, except that such termination shall not prejudice the
Executive’s rights regarding employment benefits which shall have accrued prior
to such termination, and any other remedy which the Executive may have at law,
in equity or under this Agreement, which remedy accrued prior to such
termination.

 

(d)                                 Termination by Bank or the Company
without Cause.  The Bank or the Company may, at its election
and in its sole discretion, terminate the Executive’s employment and this
Agreement at any time and for any reason or for no reason, upon 30 days prior
written notice to the Executive, without prejudice to any other remedy to which
the Bank or the Company may be entitled either at law, in equity or under this
Agreement.  Unless otherwise agreed in
writing between the Executive, the Bank and the Company, the Executive shall
immediately cease performing and discharging the duties and responsibilities of
his positions and remove himself and his personal belongings from the Bank’s
and the Company’s premises.  All rights
and obligations accruing to the Executive under this Agreement shall cease at
such termination, except that such termination shall not prejudice the
Executive’s rights regarding employment benefits which shall have accrued prior
to such termination, including the right to receive the severance benefits
specified in Section 6.2(a) or 6.2(b) below, and any other
remedy which the Executive may have at law, in equity or under this Agreement,
which remedy accrued prior to such termination.

 

(e)                                  Voluntary Termination by Executive. 
The Executive may terminate his employment and this Agreement at any
time and for any reason or no reason, upon 30 days prior written notice to the
Bank and the Company.  Unless otherwise
agreed in writing between the Executive, the Bank and the Company, the
Executive shall immediately cease performing and discharging the duties and
responsibilities of his positions and remove himself and his personal
belongings from the Bank’s and the Company’s premises All rights and
obligations accruing to the Executive under this Agreement shall cease at such
termination, except that such termination shall not prejudice the Executive’s
rights regarding employment benefits which shall have accrued prior to such
termination and any other remedy which the Executive may have at law, in equity
or under this Agreement, which remedy accrued prior to such termination.

 

6.2                                Certain Benefits upon Termination.

 

(a)                                  Termination without Cause. 
In the event this Agreement is terminated based on Section 6.1(d) (termination
without cause), then in such case, the Executive 

 

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shall receive the Accrued
Obligations on the Date of Termination, and severance benefits constituting of:

 

(i)                                     cash payment in the amount equal to one (1) times
the sum of Executive’s (A) Base Salary and (B) the Highest Annual
Bonus, payable in a lump sum within 30 days of the Date of Termination, and

 

(ii)                                  continuation of group insurance coverages
specified in Section 3.4(c) of this Agreement on terms at least equal
to those if the Executive’s employment had not been terminated, but not less
favorable than that provided to other executives in comparable positions with
the Bank, for a period of 12 months from the Date of Termination, including,
continuation of medical coverage for the Executive and his dependents pursuant
to The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), or under applicable California law pursuant to
Assembly Bill No 1401 (“Cal COBRA”),
with one hundred percent (100%) of premiums for the insurance coverages payable
by the Bank or the Company monthly to the Executive for a period of 12 months
from the Date of Termination.  After
expiration of the 12 month period, the Executive and his dependents shall have
such rights to continue to participate under the Bank’s or the Company’s group
insurance coverages specified in Section 3.4(c) of this Agreement at
the Executive’s expense to the extent available under the terms of the plan or
benefit.  The Executive agrees to notify
the Bank or the Company as soon as practicable, but not less than 10 business
days in advance of the commencement of comparable insurance coverages with
another employer.  The Bank’s obligation
for the 12 month period specified herein with respect to the foregoing benefits
shall be limited to the extent that the Executive obtains any such benefits
pursuant to a subsequent employer’s benefit plans, in which case the Bank may
reduce the coverage of any benefits it is required to provide the Executive
hereunder so long as the aggregate coverages and benefits of the combined
benefit plans of the new employer are not substantially less favorable to the
Executive than the coverages and benefits required to be provided hereunder.

 

Notwithstanding the foregoing or any other provision
of this Agreement, if any part or all of the severance benefits is subject to
taxation under Section 409A of the Code, as determined by the Bank or the
Company, with the advice of its independent accounting firm or other tax
advisors, then the severance benefits shall be subject to modification as set
forth in Section 7 of this Agreement.

 

Notwithstanding the foregoing, when the Executive is
entitled to the serverence benefits provided in Section 6.2(b), then
Executive shall not be entitled to the severance benefits pursuant to this Section 6.2(a).

 

The Executive acknowledges and agrees that severance
benefits pursuant to this Section 6.2(a) are in lieu of all damages,
payments and liabilities on account of the early termination of this Agreement
and are the sole and exclusive remedy for the Executive for a termination
specified in Section 6.1(d).

 

(b)                                 Termination and Change in Control. 
In the event of a Change in Control and at any time during the Change of
Control Period (x) the Executive’s employment is terminated, or (y) without
Executive’s written consent there occurs any material adverse change 

 

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in the nature and scope
of the Executive’s position, responsibilities, duties, or a change of 10 miles
or more in the Executive’s location of employment, or any material reduction in
Executive’s compensation or benefits and Executive voluntarily terminates his
employment, then the Executive shall receive the Accrued Obligations on the
Date of Termination, and the severence benefits consisting of:

 

(i)                                     a cash payment in an amount equal to two (2) times
the sum of Executive’s (A) Base Salary and (B) Highest Annual Bonus,
payable in lump sum within 30 days following such termination; and

 

(ii)                                  continuation of group insurance coverages
specified in Section 3.4 (c) of this Agreement on terms at least
equal to those if the Executive’s employment had not been terminated, but not
less favorable than that provided to other executives in comparable positions
with the Bank, for a period of 24 months from the Date of Termination,
including continuation of medical coverage for the Executive and his dependents
pursuant to Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), or under applicable California law pursuant to
Assembly Bill No. 1401 (“Cal COBRA”),
with one hundred percent (100%) of premiums for the insurance coverages payable
by the Bank or the Company monthly to the Executive for a period of 18 months
from the Date of Termination and monthly reimbursement to the Executive for the
next 6 months.  After such expiration of
the 24 month period, the Executive and his dependents shall have such rights to
continue to participate under the Bank’s or the Company’s group insurance
coverages specified in Section 3.4(c) of this Agreement at the
Executive’s expense to the extent available under the terms of the plan or
benefit.  The Executive agrees to notify
the Bank or the Company as soon as practicable, but not less than 10 business
days in advance of the commencement of comparable insurance coverages with
another insurance carrier.  The Bank’s
obligation for the 24 month period specified herein with respect to the
foregoing benefits shall be limited to the extent that the Executive obtains
any such benefits pursuant to a subsequent employer’s benefit plans, in which
case the Bank may reduce the coverage of any benefits it is required to provide
the Executive hereunder so long as the aggregate coverages and benefits of the
combined benefit plans of the new employer are not substantially less favorable
to the Executive than the coverages and benefits required to be provided
hereunder.

 

Notwithstanding the foregoing or any other provision
of this Agreement, if any part or all of the severance benefits is subject to
taxation under Section 409A of the Code, as determined by the Bank or the
Company, with the advice of its independent accounting firm or other tax
advisors, then the severance payment shall be subject to modification as set
forth hereafter in Section 7 of this Agreement.

 

The Executive acknowledges and agrees that severance
benefits pursuant to this Section 6.2(b) are in lieu of all damages,
payments and liabilities on account of the events described above for which
such severance benefits may be due the Executive under Section 6.2(b) 
of this Agreement.  This Section 6.2(b) shall
be binding upon and inure to the benefit of the Bank and the Company and their
respective successors and assigns.

 

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Notwithstanding the foregoing, the Executive shall not
be entitled to receive severance benefits pursuant to this Section 6.2(b) in
the event his termination of employment results from an occurrence described in
Sections 6.1(a), 6.1(b) or 6.1(c).

 

(c)           Death.  If the
Executive’s employment terminates by reason of the Executive’s death, this
Agreement shall terminate without further obligations to the Executive’s legal
representatives under this Agreement, other than for payment of Accrued
Obligations and any incentive compensation for the year in which the death
occurred prorated through the Date of Termination.  Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination; provided, however, that payment may be
deferred until the Executive’s executor or personal representative has been
appointed and qualified pursuant to the laws in effect in the Executive’s
jurisdiction of residence at the time of the Executive’s death.  The Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and the Bank to the estate and beneficiaries
of other executives in comparable positions with the Company and the Bank under
such plans, programs, practices and policies relating to death benefits, if any
as in effect on the date of the Executive’s death.  In addition, the Executive’s dependents shall
be entitled, at their cost, to continuation of medical coverage pursuant to
COBRA and CAL COBRA in accordance with the Company and Bank policies.

 

(d)           Disability.  If the
Executive’s employment terminates during the Term by reason of the Executive’s
Disability, this Agreement shall terminate without further obligations to the
Executive under this Agreement, other than for payment of Accrued Obligations,
and any incentive compensation for the year in which the termination occurs
prorated through the Date of Termination and any benefits under such plans, programs,
practices and policies relating to disability benefits, if any, as in effect on
the Date of Termination (including, in addition, the Executive’s dependents
shall be entitled, at their cost, to continuation of medical coverage pursuant
to COBRA and CAL COBRA in accordance with the Company and Bank policies).

 

(e)           Cause/Voluntary Termination. 
If the Executive’s employment terminates for Cause, this Agreement shall
terminate without further obligations to the Executive other than the
obligation to pay to the Executive the Accrued Obligations.  If the Executive’s employment terminates due
to the Executive’s voluntarily termination this Agreement shall terminate
without further obligations to the Executive other than the obligation to pay
to the Executive the Accrued Obligations.

 

(f)            Single Trigger Event.  The
provisions for payments contained in this Section 6.2 may be triggered
only once during the term of this Agreement, so that, for example, should the
Executive be terminated because of a Disability and should there thereafter be
a Change of Control, then the Executive would be entitled to be paid only under
Section 6.2(d) and not under Section 6.2(b), as well. In
addition, the Executive shall not be entitled to receive severance benefits of
any kind from any parent, wholly owned subsidiary or other affiliated entity of
the Bank or the Company if in connection with the same event of series of
events the payments provided for in this Section 6.2 have been triggered.

 

11

 

7.             Section 409A Limitation. 
It is the intention of the Bank, the Company and the Executive that the
severance benefits payable to the Executive under Section 6.2 either be
exempt from, or otherwise comply with, Section 409A (“Section 409A”)
of the Code.

 

Notwithstanding any other term or provision of this
Agreement, to the extent that any provision of this Agreement is determined by
the Bank or the Company, with the advice of its independent accounting firm or
other tax advisors, to be subject to and not in compliance with Section 409A,
including, without limitation, the definition of Change in Control or the
timing of commencement and completion of severance benefits and/or other
benefit payments to the Executive hereunder, or the amount of any such
payments, such provisions shall be interpreted in the manner required to exempt
the benefit from or to comply with Section 409A.  The Company, the Bank and the Executive
acknowledge and agree that such interpretation could, among other matters, (i) limit
the circumstances or events that constitute a “change in control;” (ii) delay
for a period of 6 months or more, or otherwise modify the commencement of
severance and/or other benefit payments; (iii) modify the completion date
of severance and/or (iv) other benefit payments and/or reduce the amount
of the benefit otherwise provided.

 

The Company, Bank and the Executive further
acknowledge and agree that if, in the judgment of the Bank or the Company, with
the advice of its independent accounting firm or other tax advisors, amendment
of this Agreement is necessary to exempt the benefits from or to comply with Section 409A,
the Bank, the Company and the Executive will negotiate reasonably and in good
faith to amend the terms of this Agreement to the extent necessary so that it
exempts the benefits from or to comply with Section 409A (with the most
limited possible economic effect on the Bank, the Company and the
Executive).  For example, if this
Agreement is subject to Section 409A and Section 409A requires that
severance and/or other benefit payments must be delayed until at least 6 months
after the Executive terminates employment, then the Bank, the Company and the
Executive shall delay payments and/or promptly seek a written amendment to this
Agreement that would, if permissible under Section 409A, eliminate any
such payments otherwise payable during the first 6 months following the
Executive’s termination of employment and substitute therefore a lump sum
payment or an initial installment payment, as applicable, at the beginning of
the 7th month following the Executive’s termination of employment which, in the
case of an initial installment payment, would be equal in the aggregate to the
amount of all such payments thus eliminated. 
Notwithstanding the foregoing, (a) the Executive and his dependents
shall not be denied access to and participation in any health or medical
insurance coverage and benefits, for any period of time the Executive and his
dependants are otherwise eligible, and (b) the Executive acknowledges and
agrees that the Company or the Bank shall have the exclusive authority to
determine whether the Executive is a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i).

 

8.             Gross Up Of Section 280G and 409A Tax. 
If all or any portion of the amounts payable to the Executive under this
Agreement, either alone or together with other payments or benefits which the
Executive has the right to receive from the Bank or the Company, constitute “excess
parachute payments” within the meaning of Section 280G of the Code, that
are subject to the excise tax imposed by Section 4999 of the Code (or
similar tax and/or assessment) , or any tax is imposed on the Executive under Section 409A,
the Bank or the Company (and its successor) shall increase the amounts payable
under this Agreement to the extent necessary to afford the Executive
substantially the same economic benefit under this Agreement as the 

 

12

 

Executive would have
received had no such excise tax under Section 280G or tax under Section 409A
been imposed on the payments due the Executive under this Agreement.  The determination of the amount of any such
taxes shall be made by the independent accounting firm employed by the Bank or
the Company, immediately prior to the Change in Control, or such other
independent accounting firm or advisor as may be mutually agreeable to the Bank
or the Company (and their respective successor), and the Executive in the
exercise of their reasonable good faith judgment.  If, at a later date, it is determined
(pursuant to final regulations or published rulings of the Internal Revenue
Service, final judgment of a court of competent jurisdiction, or otherwise)
that the amount of any such taxes payable to the Executive is greater than the
amount initially so determined, then the Bank or the Company (or its successor)
shall pay to the Executive an amount equal to the sum of such additional taxes
and any interest, fines and penalties resulting from such underpayment, plus an
amount necessary to reimburse the Executive substantially for any income,
excise or other taxes payable by the Executive with respect to such
amounts.  All gross-up payments made
hereunder, shall be paid within the period specified by Treasury Regulation Section 1.409A-3(i)(1)(v) so
that the gross-up payment shall qualify as providing for payment at a specified
time or on a fixed schedule.

 

9.             Assignment.  This
Agreement will inure to the benefit of and be binding upon the Bank and the
Company and any of their respective successors and assigns.  In view of the personal nature of the
services to be performed under this Agreement by the Executive, the Executive
will not have the right to assign or transfer any of his rights, obligations or
benefits under this Agreement.  The Bank
and the Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Bank or the Company to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
the Bank and the Company would be required to perform it if no such succession
had taken place.  As used in this
Agreement, “Bank” or “the Company” shall mean the Bank or the Company, as
applicable, as hereinbefore defined and any successor to the Company’s or Bank’s  business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

10.           Specific Performance.  The Executive
hereby represents and agrees that the services to  be performed under the terms of this
Agreement are of a special, unique, unusual, extraordinary, and intellectual
character that gives them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in an action at law.  The Executive therefore expressly agrees that
the Bank and the Company, in addition to any other rights or remedies that the
Bank and the Company may possess, shall be entitled to injunctive and other
equitable relief to prevent or remedy a breach of this Agreement by the
Executive.

 

11.           Noncompetition, No solicitation And Nondisclosure By
The Executive

 

(a)           Definitions.  The term “Trade
Secrets” shall be given its broadest possible interpretation and shall mean any
information, including formulas, patterns, compilations, reports, records,
programs, devices, methods, know-how, negative know-how, techniques, raw
material properties and specifications, formulations, discoveries, ideas,
concepts, designs, technical information, drawings, data, customer and supplier
lists, information regarding customers, buyers and suppliers, distribution
techniques, production processes, research and development projects, marketing
plans, general financial information and financial information 

 

13

 

concerning customers, the
Company’s or the Bank’s legal, business and financial structure and operations,
and other confidential and proprietary information or processes which (i) derive
independent economic value, actual or potential, from not being generally known
to the public or to other persons who can obtain economic value from its
disclosure or use and (ii) are the subject of efforts that are reasonable
under the circumstances to maintain its secrecy.

 

The term “Proprietary Information” shall also be given
its broadest possible interpretation and shall mean any and all information
disclosed or made available by the Bank to the Executive including, without
limitation, any information which is not publicly known or available and upon
which the Bank’s business or success depends.

 

(b)           The Executive shall not, during the term of this
Agreement, directly or indirectly, either as an employee, employer, consultant,
agent, principal, stockholder (except as permitted in Section 1.2 of this
Agreement), officer, director, or in any other individual or representative
capacity, engage or participate in any competitive banking or financial
services business without the prior written consent of the Board of Directors
of the Bank or the Company.

 

(c)           Following termination of this Agreement and the
Executive’s employment hereunder, the Executive shall not use any Trade Secret
or Proprietary Information of the Bank or the Company or their affiliates and
subsidiaries to solicit, encourage or assist, directly, indirectly or in any
manner whatsoever, (i) any employees of the Bank, the Company or their
affiliates and subsidiaries (including any former employees who voluntarily
terminated employment with the Bank or the Company within a 12 month period
prior to the Executive’s termination of employment) to resign or to apply for
or accept employment with any other competitive banking or financial services
business within the counties in California in which the Bank has located its
headquarters or branch offices; or (ii) any customer, person or entity
that has a business relationship with the Bank or during the 12 month period
prior to the Executive’s termination of employment with the Bank was engaged in
a business relationship with the Bank, to terminate such business relationship
and engage in a business relationship with any other competitive banking or
financial services business within the counties in California in which the Bank
has located its headquarters or branch offices.

 

(d)           In addition and not as any limitation on the
provisions of this Section 11, following termination of this Agreement and
the Executive’s employment hereunder and for 12 months thereafter, the
Executive shall not directly or indirectly, individually or as a consultant to,
or as an employee, officer, stockholder, director or other owner of or
participant in any business entity that engages in or seeks to engage in any
banking or financial services business, solicit (or assist in soliciting) any
person who is, or at any time within 1 month prior to the Executive’s
termination of employment was, an employee of the Company or the Bank who
earned $25,000 on an annual rate or more as an employee of the Company or the
Bank to work for (as an employee, consultant or otherwise) any business,
individual, partnership, firm, corporation, or other entity whether or not
engaged in competitive business with the Bank or the Company.

 

12.           Disclosure of Information. 
The Executive shall not, at any time or in any manner, directly or
indirectly, either before or after termination of this Agreement, without the
prior written consent of the Board of Directors of the Company or except as
required by law to comply with legal process including, without limitation, by
oral questions, interrogatories, requests for 

 

14

 

information or documents,
subpoena, civil investigative demand or similar process, use for his own
benefit or the benefit of any other person or entity, or otherwise disclose or
communicate to any person or entity including, without limitation, the media or
by way of the World Wide Web, any information concerning any Trade Secret or
Proprietary Information of the Company or the Bank.  The Executive further recognizes and
acknowledges that any Trade Secrets concerning any customers of the Bank or the
Company and their respective affiliates and subsidiaries, as it may exist from
time to time, is strictly confidential and is a valuable, special and unique
asset of the Bank’s and the Company’s business. 
In the event the Executive is required by law to disclose Trade Secrets
or Proprietary Information, the Executive will provide the Bank and the
Company, and their counsel with immediate notice of such request so that they
may consider seeking a protective order. 
If, in the absence of a protective order or the receipt of a waiver
hereunder, the Executive is nonetheless, in the written opinion of
knowledgeable counsel, compelled to disclose Trade Secrets or Proprietary
Information to any tribunal or any other party or else stand liable for
contempt or suffer other material censure or material penalty, then the
Executive may disclose (on an “as needed” basis only) such information to such
tribunal or other party without liability hereunder.  Notwithstanding the foregoing, the Executive
may disclose Trade Secrets or Proprietary Information as may be required by any
regulatory agency having jurisdiction over the operations of the Bank or the
Company in connection with an examination of the Bank or the Company or other
proceeding conducted by such regulatory agency.

 

13.           Written, Printed or Electronic Material. 
All written, printed or electronic material, notebooks and records
including, without limitation, computer disks, blackberry (or similar devices),
or lap top used by the Executive in performing duties for the Bank or the
Company, other than the Executive’s personal address lists, telephone lists,
notes and diaries, are and shall remain the sole property of the Bank and the
Company.  Upon termination of employment,
the Executive shall promptly return all such material (including all copies,
extracts and summaries thereof) to the Bank.

 

14.           Emergency Economic Stabilization Act of 2008 and
American Recovery and Reinvestment Act of 2009. 
Notwithstanding any provisions in this Agreement to contrary, as long as
the U.S. Treasury owns any stock or assets of the Bank or the Company pursuant
to the Emergency Economic Stabilization Act of 2008 (the “EESA”)
and/or the Troubled Asset Relief Program established by the EESA and the
American Recovery and Reinvestment Act of 2009 (“ARRA”),
in the event that any payment or benefit to Executive pursuant to the terms of
this Agreement or otherwise in connection with the Executive’s termination of
employment or contingent upon a change in ownership or control pursuant to any
plan or arrangement or other agreement with the Bank or the Company (or any
affiliate) would constitute a “parachute payment” or any other prohibited payment
within the meaning of EESA or ARRA, then the payments and benefits payable or
to be received by the Executive shall not be payable or shall be reduced to the
minimum extent necessary to comply with EESA and ARRA and any rules and
regulations promulgated thereunder by the United States Department of
Treasury.  This paragraph 14 shall no
longer be in effect after such time as the United States Treasury does not own
any equity or debt interest in the Company.

 

15

 

15.           Miscellaneous.

 

15.1         Notice.  For the
purpose of this Agreement, notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or 3 days after the date of mailing by United States
mail, certified or registered, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
addresses as either party may have furnished to the other in writing in accordance
herewith, except that notice of a change of address shall be effective only
upon actual receipt:

 

	
  Company:

  	
   

  	
  HERITAGE
  COMMERCE CORP

  
	
   

  	
   

  	
  150
  Almaden Blvd.

  
	
   

  	
   

  	
  San
  Jose, CA 95113

  
	
   

  	
   

  	
  Attn:
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Bank:

  	
   

  	
  HERITAGE
  BANK OF COMMERCE

  
	
   

  	
   

  	
  150
  Almaden Blvd.

  
	
   

  	
   

  	
  San
  Jose, CA 95113

  
	
   

  	
   

  	
  Attn:
  President

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Buchalter
  Nemer

  
	
   

  	
   

  	
  1000
  Wilshire Boulevard, Suite 1500

  
	
   

  	
   

  	
  Los
  Angeles, CA 90017-2457

  
	
   

  	
   

  	
  Attn:
  Mark A. Bonenfant, Esq.

  
	
   

  	
   

  	
   

  
	
  Executive:

  	
   

  	
  Dan T.
  Kawamoto

  
	
   

  	
   

  	
  150
  Almaden Boulevard

  
	
   

  	
   

  	
  San
  Jose, CA 95113

  

 

15.2         Amendments or Additions.  No amendment,
modification or additions to this Agreement shall be binding unless in writing
and signed by the parties hereto.

 

15.3         Section Headings.  The section
headings used in this Agreement are included solely for convenience and shall
not affect, or be used in connection with, the interpretation of this
Agreement.

 

15.4         Severability.  The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

 

15.5         Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but both of which together will constitute one and the same
instrument.

 

15.6         Mediation.  Prior to
engaging in any legal or equitable litigation or other dispute resolution
process, regarding any of the terms and conditions of this Agreement between
the parties, or concerning the subject matter of the Agreement between the
parties, each party 

 

16

 

specifically agrees to
engage in good faith, in a mediation process at the expense of the Bank,
complying with the procedures provided for under California Evidence Code Sections
1115 through and including 1125, as then currently in effect.  The parties further and specifically agree to
use their best efforts to reach a mutually agreeable resolution of the matter.  The parties understand and specifically agree
that should any party to this Agreement refuse to participate in mediation for
any reason, the other party will be entitled to seek a court order to enforce
this provision in any court of appropriate jurisdiction requiring the
dissenting party to attend, participate, and to make a good faith effort in the
mediation process to reach a mutually agreeable resolution of the matter.

 

15.7         Arbitration.  To the extent
not resolved through mediation as provided in Section 15.6, all claims,
disputes and other matters in question arising out of or relating to this
Agreement, any termination of the Executive’s employment, the enforcement or
interpretation of this Agreement, or because of an alleged breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
including (without limitation) any state or federal statutory claims, shall be
resolved by binding arbitration in Santa Clara County, California, before a
sole arbitrator (the “Arbitrator”)
mutually selected by the parties from Judicial Arbitration and Mediation
Services (“JAMS”) in accordance with the rules and
procedures of JAMS then in effect.  If
JAMS is no longer able to supply the arbitrator, such arbitrator shall be
mutually selected from the American Arbitration Association (“AAA”).  The obligation
of the parties to arbitrate pursuant to this clause shall be specifically
enforced in accordance with, and shall be conducted consistently with the
provisions of Title 9 of Part 3 of the California Code of Civil Procedure
as the exclusive remedy of such dispute; provided, however, that provisional
injunctive relief may, but need not, be sought in a court of law while
arbitration proceedings are pending, and any provisional injunctive relief
granted by such court shall remain effective until the matter is finally
determined by the Arbitrator.  Final
resolution of any dispute through arbitration may include any remedy or relief
that the Arbitrator deems just and equitable, including any and all remedies provided
by applicable state or federal statutes. 
At the conclusion of the arbitration, the Arbitrator shall issue a
written decision that sets forth the essential findings and conclusions upon
which the Arbitrator’s award or decision is based.  Any award or relief granted by the Arbitrator
hereunder shall be final and binding on the parties hereto and may be enforced
by any court of competent jurisdiction.

 

15.8         Attorneys Fees.  In the event
of litigation, arbitration or any other action or proceeding between the
parties to interpret or enforce this Agreement, or any part thereof or relating
to this Agreement, the prevailing party shall be entitled to recover its costs
related to such action or proceeding and its reasonable fees of attorneys,
accountants and expert witnesses incurred by such party in connection with any
such action or proceedings.  The
prevailing party shall be deemed to be the party which obtains substantially
the relief sought by final resolution, compromise or settlement, or as may
otherwise be determined by order of a court of competent jurisdiction in the
event of litigation, an award or decision of an arbitrator in the event of
arbitration.

 

15.9         Entire Agreement.  This
Agreement supersedes any and all agreements, either oral or in writing, between
the parties with respect to the employment of the Executive by the Bank and the
Company and contains all of the covenants and agreements between the parties
with respect to the employment of the Executive by the Bank and the
Company.  Each party to 

 

17

 

this Agreement
acknowledges that no other representations, inducements, promises, or
agreements, oral or otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not set forth herein, and that no other agreement,
statement, or promise not contained in this Agreement shall be valid or binding
on either party.

 

15.10       Waiver.  The failure
of a party to insist on strict compliance with any of the terms, provisions,
covenants, or conditions of this Agreement by another party shall not be deemed
a waiver of any term, provision, covenant, or condition, individually or in the
aggregate, unless such waiver is in writing, nor shall any waiver or
relinquishment of any right or power at any one time or times be deemed a
waiver or relinquishment of that right or power for all or any other times.

 

15.11       Severability.  If any
provision in this Agreement is held by a court of competent jurisdiction or
arbitrator to be invalid, void, or unenforceable, the remaining provisions
shall nevertheless continue in full force and effect without being impaired or
invalidated in any way.  Any provision of
this Agreement held invalid or unenforceable only in part or degree will remain
in full force and effect to the extent not held invalid or unenforceable.

 

15.12       Interpretation.  This
Agreement shall be construed without regard to the party responsible for the
preparation of the Agreement and shall be deemed to have been prepared jointly
by the parties.  Any ambiguity or
uncertainty existing in this Agreement shall not be interpreted against any
party, but according to the application of other rules of contract
interpretation, if an ambiguity or uncertainty exists.

 

15.13       Governing Law and Venue.  The laws of
the State of California, other than those laws denominated choice of law rules,
shall govern the validity, construction and effect of this Agreement.  Any action which in any way involves the
rights, duties and obligations of the parties hereunder and is not resolved by
binding arbitration shall be brought in the courts of the State of California
and venue for any action or proceeding shall be in Santa Clara County or in the
United States District Court for the Northern District of California, and the
parties hereby submit to the personal jurisdiction of said courts.

 

15.14       Payments Due Deceased Executive. 
If the Executive dies prior to the expiration of the term of his
employment, any payments that may be due the Executive from the Bank or the
Company under this Agreement as of the date of death shall be paid to the
Executives heirs, beneficiaries, successors, permitted assigns or transferees,
executors, administrators, trustees, or any other legal or personal
representatives.

 

15.15       Effect of Termination on Certain Provisions. 
Upon the termination of this Agreement, the obligations of the Bank, the
Company and the Executive hereunder shall cease except to the extent of the
Bank’s or the Company’s obligation to make payments, if any, to or for the
benefit of the Executive following termination, and provided that Sections 3.3
and 3.4(d) (and as provided in existing agreements relating to these
sections) and Sections 4, 6.2, 7, 8, 9, 10, 11, 12, 13, 14, 15.1, 15.3, 15.4,
15.6, 15.7, 15.8, 15.9, 15.10, 15.11, 15.12, 15.13, 15.14 and 15.15 shall
remain in full force and effect.

 

[Remainder of page intentionally left blank]

 

18

 

15.16       Advice of Counsel and Advisors. 
The Executive acknowledges and agrees that he has read and understands
the terms and provisions of this Agreement and prior to signing this Agreement,
he has had the advice of counsel and/or such other advisors as he deemed
appropriate in connection with his review and analysis of such terms and
provisions of this Agreement.

 

IN WITNESS WHEREOF, each of the parties hereto has
executed this Agreement on the date first indicated above.

 

	
   

  	
  “COMPANY”

  
	
   

  	
   

  
	
   

  	
  HERITAGE
  COMMERCE CORP,

  
	
   

  	
  a
  California bank holding company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Walter Kaczmarek

  
	
   

  	
   

  	
  Walter Kaczmarek,

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “BANK”

  
	
   

  	
   

  
	
   

  	
  HERITAGE
  BANK OF COMMERCE,

  
	
   

  	
  a
  California banking corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Walter Kaczmarek

  
	
   

  	
   

  	
  Walter Kaczmarek,

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “EXECUTIVE”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dan T. Kawamoto

  
	
   

  	
   

  	
  Dan T. Kawamoto

  

 

19Exhibit 10.1

 

VIRGIN MEDIA INC.

 

FORM OF
RESTRICTED STOCK UNIT AGREEMENT

 

THIS
AGREEMENT (this “Agreement”) is made and entered into as of June 12, 2009
(“Grant Date”) by and between Virgin Media Inc., a Delaware Company (the “Company”),
and [NAME] (the Employee”).

 

1.             Grant of
Restricted Stock Units. 
Subject to and upon the terms, conditions, and restrictions set forth in
this Agreement and in the Virgin Media Inc. 2006 Stock Incentive Plan (the “Plan”),
the Company hereby grants to the Employee a maximum of [Number]  Restricted Stock Units. 
Unless the context otherwise requires, terms used but not defined herein
shall have the same meaning as in the Plan.

 

2.             Vesting
of Restricted Stock Units.

 

(a)            Vesting Schedule.  Except as otherwise provided in this Agreement,
a number of Restricted Stock Units shall become non-forfeitable if and only if (i) the
Performance Condition set out in Exhibit A has been met and (ii) the
Employee has remained in the continuous employ of the Company from the Grant
Date through the date on which the Restricted Stock Units are settled pursuant
to Section 4 hereof.  The number of
Restricted Stock Units that shall become non-forfeitable shall be calculated in
accordance with the formula set forth in Exhibit A.

 

(b)           No Accelerated Vesting.  Notwithstanding Section 7(b)(2) of
the Plan, the Restricted Stock Units shall not vest or become non-forfeitable
upon the occurrence of an Acceleration Event.

 

(c)            Continuous Employment.  For purposes of this Agreement, the
continuous employment of the Employee with the Company shall include employment
with a Subsidiary Company, Parent Company or Affiliated Entity, and shall not
be deemed to have been interrupted, and the Employee shall not be deemed to
have ceased to be an employee of the Company by reason of the transfer of the
Employee’s employment among the Company, a Subsidiary Company, Parent Company
or Affiliated Entity.

 

3.             Forfeiture
of Restricted Stock Units.

 

(a)            Any Restricted Stock Units that have
not theretofore become non-forfeitable shall be forfeited if the Employee: (i) has
not entered into new terms and conditions of employment with the Company (or a
Subsidiary Company, Parent Company or Affiliated Entity) on terms satisfactory
to the Company on or before July 31, 2009 (unless otherwise agreed by the
Company); and/or (ii) ceases to be continuously employed by the Company
prior to the date on which the Restricted Stock Units are settled pursuant to Section 4
hereof.  In the event of a forfeiture,
forfeited Restricted Stock Units shall cease to be outstanding and the Employee
shall cease to have right, title or interest in, to or on account of the
forfeited Restricted Stock Units or any underlying shares of Common Stock.

 

(b)           For the purposes of this Agreement,
where the Employee ceases to hold an office or employment with the Company
because his employment is terminated by his employer without notice or where he
terminates his employment with or without notice, his employment shall be
deemed to cease on the date on which the termination takes effect or, if
earlier, the date of giving notice. If the Employee’s employment is terminated
by his employer with notice his employment shall be deemed to cease on the date
when such notice expires.

 

4.             Settlement
of Restricted Stock Units. 
Upon Restricted Stock Units becoming non-forfeitable in accordance with Section 2
of this Agreement, each such Restricted Stock Unit shall entitle the Employee
to, in the discretion of the Committee, one share of Common Stock or an amount
of cash equal to the Fair Market Value of one share of Common Stock determined
as of the date on which such Restricted Stock Units become
non-forfeitable.  Settlement of the
Restricted Stock Units shall occur on the “Prescribed Date” as nominated by the
Committee. The Prescribed Date shall be a date on or after the date on which
the Company’s annual audited financial statements for the year ending December 31,
2011 are filed with the SEC but shall not, in any event, be a date later than April 30,
2012.  In determining the Prescribed
Date, the Committee shall take into account closed trading periods for the
Common Stock and the Company’s Insider Trading Policy.  If settlement is made in the form of shares
of Common Stock, such shares shall be evidenced by book entry registration or by
a certificate registered in the name of the Employee.

 

5.             Dividend,
Voting and Other Rights. 
The Employee shall have none of the rights of a shareholder with respect
to any shares of Common Stock underlying the Restricted Stock Units, including
the right to vote such

 

 

shares
and receive any dividends that may be paid thereon until such time, if any,
that shares of Common Stock are delivered to the Employee in settlement
thereof; provided, that, upon the occurrence of an event set forth in Section 9
of the Plan, the Restricted Stock Units shall be subject to adjustment pursuant
to Section 9 of the Plan.

 

6.             No Special Employment Rights.  Nothing contained in the Plan or this
Agreement shall be construed or deemed by any person under any circumstances to
obligate the Company to continue the employment of the Employee for any period.

 

7.             Withholding.  It shall be a condition to the vesting of any
Restricted Stock Units, the payment of cash hereunder, or the issuance of
shares of Common Stock hereunder, as the case may be, that the Employee shall
pay, or make provisions for payment of, all income, employment or other tax (or
similar) and social security (or similar) withholding requirements in a manner
that is satisfactory to the Company for the payment thereof.

 

8.             Miscellaneous.

 

(a)           Except as otherwise expressly provided herein, this
Agreement may not be amended or otherwise modified in a manner that adversely
affects the rights of the Employee, unless evidenced in writing and signed by
the Company and the Employee.

 

(b)           All notices under this Agreement
shall be delivered by hand, sent by commercial overnight courier service or
sent by registered or certified mail, return receipt requested, and first-class
postage prepaid, to the Employee at the address on file with the Company’s
Payroll Department and to the Company at 909 Third Avenue, Suite 2863, New
York, NY 10022, or at such other address as may be designated in a notice by
either party to the other.

 

(c)           The Company shall not be obligated to
issue any shares of Common Stock or other securities pursuant to this Agreement
if the issuance thereof would result in a violation of any applicable federal
and state securities laws.

 

(d)           Any amendment to the Plan shall be
deemed to be an amendment to this Agreement to the extent that the amendment is
applicable hereto; provided, however, that no amendment shall
adversely affect the rights of the Employee under this Agreement without the
Employee’s consent, except to the extent necessary to comply with applicable law.

 

(e)           This Agreement is subject to the
terms and conditions of the Plan.  In the
event of any inconsistency between the provisions of this Agreement and the
Plan, the Plan shall govern.  The
Committee, acting pursuant to the Plan, as constituted from time to time,
shall, except as expressly provided otherwise herein, have the right to
determine any questions that arise in connection with this Agreement.

 

(f)            Each provision of this Agreement
shall be considered separable.  The
invalidity or unenforceability of any provision shall not affect the other
provisions, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision was omitted.

 

(g)           This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.

 

(h)           The failure of the Company or the
Employee to insist upon strict performance of any provision hereunder,
irrespective of the length of time for which such failure continues, shall not
be deemed a waiver of such party’s right to demand strict performance at any
time in the future.  No consent or
waiver, express or implied, to or of any breach or default in the performance
of any obligation or provision hereunder shall constitute a consent or waiver
to or of any other breach or default in the performance of the same or any
other obligation hereunder.

 

(i)            This Agreement is a matter entirely
separate from any pension right or entitlement that the Employee may have and
from his or her terms and conditions of employment, and, in particular (but
without limiting the generality of the foregoing), if the Employee leaves the
employment of the Company and any Parent Company, Subsidiary Company or
Affiliated Entity or otherwise ceases to be an employee thereof, he or she
shall not be entitled to any compensation for any loss of any right or benefit
or prospective right or benefit under this Agreement which he or she might
otherwise have enjoyed whether such compensation is claimed by way of damages
for wrongful dismissal or other breach of contract or by way of compensation
for loss of office or otherwise howsoever.

 

(j)            No term in this Agreement is
enforceable under the Contract (Rights of Third Parties) Act 1999, but this
does not affect any rights or remedy of a third party which exists or is
available apart from such Act.

 

 

IN
WITNESS WHEREOF, the parties to the Agreement have duly executed and delivered
this Agreement as of the date first written above.

 

 

	
   

  	
  VIRGIN
  MEDIA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

ACCEPTED AND AGREED

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

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