Document:

Exhibit 10.2

NON-COMPETE, NON-SOLICITATION

AND CONFIDENTIALITY AGREEMENT

THIS NON-COMPETE, NON-SOLICITATION AND CONFIDENTIALITY
AGREEMENT (this “Agreement”) is entered into this 8th day of February, 2007, by and among Heritage
Commerce Corp, a California Corporation (“Heritage”), Heritage Bank of
Commerce, a California banking corporation (“HBC”) and John J. Hounslow
(“Shareholder”).

WHEREAS, concurrently with the execution of this
Agreement, Heritage, HBC and Diablo Valley Bank (“Diablo”) have entered
into that certain Agreement and Plan of Merger (the “Merger Agreement”)
dated as of February 8, 2007 whereby on the Effective Date (as defined in
the Merger Agreement) Diablo will merge with and into HBC and HBC shall survive
the merger (the “Merger”).

WHEREAS, Shareholder is the Chairman of the Board and
Chief Administrative Officer of Diablo and owns 6.06% of the issued and
outstanding shares of Diablo common stock;

WHEREAS, Shareholder acknowledges that the execution
and delivery of this Agreement by Shareholder is a condition precedent to the
obligations of the parties entering into the Merger Agreement and the
consummation of the Merger, and Shareholder acknowledges and agrees that
Heritage, HBC and Diablo would not proceed forward and consummate the transactions
contemplated under the Merger Agreement unless Shareholder enters into this
Agreement;

WHEREAS, Heritage, HBC and Shareholder acknowledge
that the covenants and agreements of Shareholder contained in this Agreement
are necessary to protect and preserve Diablo’s business for the benefit of
Heritage and HBC after consummation of the transactions contemplated by the Merger
Agreement;

WHEREAS, Shareholder has significant knowledge and
information concerning the business of Diablo and that such business is very
competitive;

WHEREAS, Shareholder will receive significant
consideration for the Shareholder’s exchange of his Diablo common stock through
the Merger and additional consideration under this Agreement;

WHEREAS, Shareholder will become a member of the Board
of Directors of Heritage and HBC on the Effective Date (as defined herein);

WHEREAS, this Agreement shall become effective at the
Effective Time (as defined in the Merger Agreement) of the Merger (the “Effective
Date”);

NOW, THEREFORE, in consideration of the promises and
covenants contained herein and for other good and valuable consideration, the
receipt, sufficiency and adequacy of which are mutually acknowledged by each
party, it is agreed as follows:

1.             Definitions.  Capitalized terms used in this Agreement not
otherwise defined have the meaning given such term in the Merger Agreement.  For purposes of this Agreement, the term “Business”
means the business of banking (including, without limitation, the acceptance of
deposits and the making of loans) as conducted by state chartered banks,
nationally chartered banks or office of thrift supervision chartered
institutions conducting business in the state of California (a) to be
undertaken in the formation of a new banking organization or (b) engaged in
by an existing banking organization with $1 billon or less of assets.

2.             Purpose.  Shareholder acknowledges and agrees that the
market for the Business is very competitive within the Restrictive Territory
(as defined herein), and one way that Diablo maintained its business and its
competitive position in the marketplace prior to the Closing was by investing
time and money in developing proprietary products, unique approaches to the
business, banking systems and strong client, vendor, and employee relationships.  Shareholder further acknowledges and agrees
that proprietary and other information related to such 

 1
 

products, approaches and
relationships are highly confidential, and maintaining that confidentiality is
critical to Diablo’s success. 
Shareholder further acknowledges and agrees that Diablo has invested
substantial time and resources into developing relationships, customer lists
and business models and strategies and that disruption of such relationships or
misuse of such lists, models, and strategies would damage the business of
Diablo acquired by Heritage and HBC.

3.             Shareholder
Covenants.

(a)           Non-Competition.  Shareholder hereby covenants and agrees that
from the Effective Date until the third (3rd) anniversary of the Effective Date (“Restricted Period”),
Shareholder will not without the prior written consent of Heritage, engage or
participate or have any interest, directly or indirectly, in any Business
anywhere in the counties of Santa Clara, Alameda, Contra Costa, Marin,
San Francisco and San Mateo located in the State of California (“Restricted
Territory”) (all such entities shall be referred to each as “Competitor” or
collectively as “Competitors,”), with respect to the following acts:  (i) own any equity interest in any
Competitor; (ii) operate, join, control, advise, become a founder or
otherwise participate in any Competitor; (iii) lend credit or money for the
purpose of assisting another to establish or operate any Competitor; (iv)
request or advise any customer, strategic partner or vendor of Diablo that
becomes a present or future customer, strategic partner or vendor of Heritage,
HBC or their subsidiaries now and hereinafter existing (collectively, the “Affiliated
Companies”) to withdraw, curtail or cancel its business with Heritage, HBC
or the Affiliated Companies anywhere in the Restricted Territory;
(v) induce or influence (or attempt to induce or influence) any person or
entity who is engaged (as an employee, agent, independent contractor or
otherwise) by Heritage, HBC or the Affiliated Companies to terminate his, her
or its employment or engagement for the purpose of obtaining employment with a
Competitor; (vi) solicit any employee of Heritage, HBC or the Affiliated
Companies to leave employment and become affiliated with any Competitor; (vii)
solicit any actual or “prospective customer” (as hereinafter defined), which is
or was served by Diablo, in connection with any business of any Competitor, or
(viii) solicit, influence or attempt to influence any customer which is or was
served by Diablo to discontinue its business or service available from
Heritage, HBC or the Affiliated Companies; provided, that,
Shareholder may own and hold as an investment of up to 1% of any corporation within
the Restrictive Territory that is listed on a national stock exchange and that
is engaged in a business that is competitive with Heritage, HBC or an
Affiliated Company, but Shareholder may not otherwise participate (whether in
management or otherwise) in such corporation. 
A “prospective customer” shall mean a company, person or other
entity with which Shareholder knows, or reasonably should know, that Diablo has
had actual contact with or has begun formulating a targeted strategy for
contact at any time during the term of this Agreement in connection with the
operation of the Business.  “Engaged
in business” shall include, without limitation, establishment of goodwill
or business reputation, maintenance of business assets and properties, and
dealings with customers, strategic partners, prospective customers, suppliers,
or vendors.

(b)           Confidentiality.  Shareholder acknowledges and agrees that the
Shareholder has occupied a position of trust and confidence with Diablo prior
to the date hereof and has had access to and has become familiar with the
following, any and all of which constitutes confidential information of Diablo
(collectively “Confidential Information”) (a) any and all proprietary intellectual
property or trade secrets concerning the business and affairs of Diablo,
product specifications, data, know-how, formulae, compositions, processes,
designs, graphs, drawings, samples, inventions and ideas, past, current and
planned research and development, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), database
technologies, systems, structures, architectures, processes, improvements,
devices, know-how, discoveries, concepts, methods, information of Diablo and
any other information, however documented, of Diablo that is a trade secret
within the meaning of any applicable law; (b) any and all proprietary non-public
information concerning the business and affairs of Diablo (which includes any
historical financial statements, financial projections, and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, contractors, agents, suppliers, personnel
training, techniques and materials, manufacturing methods, designs and techniques,
purchasing methods and techniques, however documented; and (c) any and all
notes, analyses, compilations, studies, summaries and other material prepared
by or for Diablo containing or based, in whole or part, upon any information
included in the foregoing.

Shareholder acknowledges and agrees that the
protection of the Confidential Information is necessary to protect and preserve
the value of Diablo’s business and proprietary properties being acquired by
Heritage and HBC.  Therefore, Shareholder
hereby agrees not to, at any time, disclose to any unauthorized Persons or use
for his or its 

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own account or for the benefit of any third party any
Confidential Information, whether or not such information is embodied in
writing or other physical form or is retained in the memory of Shareholder,
without Heritage’s written consent, unless and to the extent that the
Confidential Information is or becomes generally known to and available for use
by the public other than as a result of Shareholder’s fault or the fault of any
other Person bound by a duty of confidentiality to Heritage, HBC or the
Affiliated Companies. Shareholder agrees to deliver to Heritage at the
Effective Date, and at any other time Heritage may request, all documents,
memoranda, notes, plans, records, reports and other documentation, models,
components, devices or computer software, whether embodied in a disk or in
other form (and all copies of all of the foregoing), that contain Confidential
Information and any other Confidential Information that Shareholder may then
possess or have under Shareholder’s control.

(c)           Breach.  Shareholder, Heritage and HBC each recognize
and acknowledge that the Confidential Information and other knowledge
Shareholder has about Diablo and has and will obtain from Heritage, HBC or the
Affiliated Companies is special and unique, and any violation of the covenants
contained in this Agreement is likely to cause irreparable damage to Heritage,
HBC or the Affiliated Companies.  Therefore,
the parties agree that, upon any breach of any covenant contained in this
Section 3 by Shareholder, Heritage and HBC shall be entitled to an
appropriate injunction for a violation, threatened or actual, of such covenant,
in addition to all other relief available under applicable law.  If a court or arbitrator has determined that
Shareholder has committed a breach by Shareholder of any covenant set forth in
Section 3 of this Agreement, the Restricted Period will be extended by the
period of the duration of such breach.

(d)           Acknowledgment.  Shareholder acknowledges and agrees that the
restrictions set forth in this Section 3 are reasonable in scope and
essential to the preservation of Diablo’s business and proprietary properties
and that enforcement of these restrictions will not cause Shareholder any
hardship, and because of Shareholder’s background and experience, will not in
any manner preclude Shareholder from becoming gainfully employed in such a
manner and to such an extent as will provide a standard of living for
Shareholder and the members of Shareholder’s family of at least the sort and
fashion to which they have become accustomed. 
Each of Heritage, HBC and Shareholder acknowledges and agrees that the
covenants and agreements contained in this Section 3 have been negotiated
in good faith by each of them.  Each of
Heritage, HBC and Shareholder further acknowledges that (i) the goodwill
associated with the existing vendors, customers, assets and employees of Diablo
prior to the transactions contemplated herein is an integral component of the
value of Diablo to Heritage and HBC and is reflected in the consideration to be
received by Diablo shareholders, including the Shareholder pursuant to this
Agreement, and (ii) the covenants and agreements contained in this
Section 3 are necessary to preserve the value of Diablo’s business and
proprietary properties for Heritage and HBC following the transaction.  Each of Heritage, HBC and Shareholder
acknowledges that the limitations of time, geography and scope of activity
agreed to in Section 3 are reasonable because, among other things:  (A) Heritage, HBC and Diablo are engaged
in a highly competitive industry and have their operations in the Restricted
Territory, (B) Shareholder had unique access to, and will continue to have
access to, Confidential Information, including trade secrets, and know-how of Diablo
and its business and proprietary properties, (C) Shareholder is receiving
significant consideration in connection with the transactions contemplated by
the Merger Agreement and this Agreement, including Section 6, and
(D) this Agreement provides no more protection than is necessary to
protect Heritage’s and HBC’s interest in the goodwill of Diablo and its
business and proprietary properties, Confidential Information and Diablo,
Heritage and HBC trade secrets.

(e)           No Disparagement.  Shareholder will not, directly or indirectly,
disparage Heritage and HBC, the business formerly conducted by Diablo, the
business conducted by Heritage and HBC or any shareholder, director, officer,
employee or agent of Heritage or HBC;

(f)            Future Employer.  Shareholder will, during the Restrictive
Period, within ten days after accepting any employment, consulting engagement,
engagement as an independent contractor, partnership or other association that
might reasonably involve the Business, advise Heritage of the identity of the
new employer, client, partner or other Person with whom Shareholder has become
associated.  Following receipt of such
notice if Heritage in its reasonable judgment determines that Shareholder’s
proposed association involves a Person engaged in the Business, Heritage may
serve notice upon each such Person that such Shareholder is bound by this
Agreement and furnish each such Person with a copy of this Agreement or
relevant portions thereof.

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(g)           Separate Agreement.  The covenants of Shareholder contained in
this Section 3 shall each be construed independently of any other
provision in this Agreement, and the existence of any claim or cause of action
of Shareholder against Heritage or HBC whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Heritage or HBC
of such covenants.

(h)           Survival of
Covenants.  The covenants contained
in this Section 3 shall survive the termination of this Agreement by either
party hereto for the periods provided in Section 3.

4.             Conflict.  Shareholder represents and warrants to
Heritage and HBC that Shareholder has not executed any written agreement with
any other person or entity that would prohibit Shareholder from entering into
this Agreement.  Further, Shareholder
represents and warrants to Heritage and HBC that the execution of this
Agreement by Shareholder will not conflict with any obligations or duties which
Shareholder may have to prior employers or pursuant to any other agreement.

5.             Non-Disclosure of
Agreement.  Shareholder shall not
disclose the terms and provisions of this Agreement or any other document
executed in connection herewith except as required by law to any Person; provided
that Shareholder may disclose the non-competition and confidentiality covenants
contained in Section 3 of this Agreement to a prospective employer or
business partner with the prior written consent of Heritage.

6.             Monetary
Consideration.  In addition to the
consideration of the recitals, agreements and terms in this Agreement, Heritage
shall pay Shareholder $200,000 pro rata over a thirty (30) month period
commencing on the first month following the Effective Date.  Payments shall be made to Shareholder on or
before the 15th day of each month.  If Shareholder dies prior to the time the
payments pursuant to this Section 6 have been paid in full, then the remaining
amounts due and owing shall be paid to the Shareholder’s estate.

7.             Successors and
Assigns.  This Agreement will be
binding upon Heritage and HBC and Shareholder and will inure to the benefit of
Heritage and HBC and its affiliates, successors and assigns.

8.             Waiver.  The rights and remedies of the parties to
this Agreement are cumulative and not alternative. Neither the failure nor any
delay by any party in exercising any right, power or privilege under this
Agreement will operate as a waiver of such right, power or privilege, and no
single or partial exercise of any such right, power or privilege will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this Agreement can be
discharged, in whole or in part, by a waiver or renunciation of the claim or
right except in writing; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party, or of the right of the party giving such notice or demand to
require the other party, to take further action without notice or demand as
provided in this Agreement.

9.             Governing Law.  This Agreement will be governed by the laws
applied by courts of California to contracts entered into within that state by
parties residing within that state and having no connection to any other state.

10.           Jurisdiction;
Service of Process.  Any proceeding
arising out of or relating to this Agreement may be brought in the courts of
the State of California, or, if it has or can acquire jurisdiction, in the
United States District Court for the Northern District of California, and each
of the parties irrevocably submits to the exclusive jurisdiction of each such
court in any such proceeding, waives any objection it may now or hereafter have
to venue or to convenience of forum, agrees that all claims in respect of the
proceeding shall be heard and determined only in any such court and agrees not
to bring any proceeding arising out of or relating to this Agreement in any
other court.  The parties agree that
either or both of them may file a copy of this paragraph with any court as
written evidence of the knowing, voluntary and bargained agreement between the parties
irrevocably to waive any objections to venue or to convenience of forum.  Process in any proceeding referred to in the
first sentence of this section may be served on any party as provided under
California law.

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11.           Severability.  Whenever possible, each provision and term of
this Agreement will be interpreted in a manner to be effective and valid, but
if any provision or term of this Agreement is held to be prohibited or invalid,
then such provision or term will be ineffective only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions
or terms of this Agreement. If any of the covenants set forth in Section 3
of this Agreement are held to be unreasonable, arbitrary or against public
policy, such covenants will be considered divisible with respect to scope, time
and geographic area, and in such lesser scope, time and geographic area, will
be effective, binding and enforceable against Shareholder to the fullest extent
under California law.

12.           Execution of
Agreement.  This Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.  The exchange of copies of this Agreement and
of signature pages by facsimile transmission shall constitute effective
execution and delivery of this Agreement as to the parties and may be used in
lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by
facsimile shall be deemed to be their original signatures for all purposes.

13.           Section Headings,
Construction.  The headings of
sections in this Agreement are provided for convenience only and will not
affect its construction or interpretation. All references to “Section” or “Sections”
refer to the corresponding Section or Sections of this Agreement unless
otherwise specified. All words used in this Agreement will be construed to be
of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word “Including” does not limit the preceding words or
terms.

14.           Notices.  All notices, consents, waivers and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt); (b) sent by facsimile (with written confirmation of receipt); or (c)
when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):

Shareholder:                                                                             John
J. Hounslow

PO Box 839

Diablo, CA  94528

Facsimile:  (925) 855-8542

with a copy to:                                                                 Bingham
McCutchen LLP

3 Embarcadero Center

San Francisco, CA 94111

Attention: James M. Rockett

Facsimile:  (415) 393-2286

Heritage and HBC:               Heritage
Commerce Corp

150 Almaden Blvd.

San Jose, California  95113

Attn:  Walter T. Kaczmarek

Facsimile: (408) 534-4940

With copy to:                                                                      Buchalter
Nemer

1000 Wilshire Boulevard

Suite 1500

Los Angeles, CA  90017-2457

Attn:  Mark A. Bonenfant, Esq.

Facsimile:  (213) 896-0400

15.           Recitals.  The recitals are incorporated herein and made
a part of this Agreement.

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16.           Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior written and oral agreements and
understandings between the parties with respect to the subject matter of this
Agreement.  This Agreement may not be
amended except by a written agreement executed by the party to be charged with
the amendment.

[signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed
this Non-Compete, Non-Solicitation and Confidentiality Agreement on the date
first set forth above.

	
   

  	
  HERITAGE COMMERCE CORP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Walter T. Kaczmarek

  	
   

  
	
   

  	
   

  	
  Walter T. Kaczmarek

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HERITAGE
  BANK OF COMMERCE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Walter T. Kaczmarek

  	
   

  
	
   

  	
   

  	
  Walter T. Kaczmarek

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHAREHOLDER

  
	
   

  	
   

  
	
   

  
	
   

  	
  /s/ John J.
  Hounslow

  	
   

  
	
   

  	
  John J. Hounslow

  

 

 7Exhibit
10.3

June 20, 2007

Mr. John J. Hounslow

2860 W. Bayshore Road

Palo Alto, CA 94303

Re:                               Board
of Directors

Dear John:

We welcome you to the Board of Directors of Heritage
Commerce Corp (“Heritage”) and look forward to a wonderful working relationship
as we work toward building Heritage and Heritage Bank of Commerce into a
successful financial institution for its shareholders, employees and bank
customers.

We have provided you with our Board package that
contains general information about Heritage and specific policies applicable to
Board members.

This letter will set forth the various compensation
and benefits being made available to you so long as you are a member of the
Board of Directors.

You will receive a monthly retainer of $2,000 per
month.  In addition, you will receive
$800 per committee meeting attended in person and $400 for each committee
meeting attended by telephone.  The
Corporate Governance and Nominating Committee makes all committee assignments
and I am informed that the Committee has appointed you to the Strategic
Planning and Finance Committee.  You will
be entitled to bi-annual grants of 6,000 to 8,000 stock options as determined
by the Compensation Committee and approved by the Board of Directors.  The options will be granted pursuant to the
Heritage 2004 Stock Option Plan.  You may
defer your fees through the Directors Deferred Compensation Program.

You will be reimbursed for all of your Heritage
related business expenses in accordance with Heritage’s general expense
reimbursement policy.  Heritage will pay
$280.00 per month toward your Country Club dues through December 31, 2009,
provided you are a member of the Board of Directors during such period.  You will have the use of your current office
at the premises formerly maintained by Diablo Valley Bank through December 31,
2009, provided you are a member of the Board of Directors during such
period.  Heritage will continue to honor
the current automobile lease entered into by Diablo Valley Bank for your use of
a automobile, and reimburse you for fuel, maintenance and automobile insurance,
through September 8, 2009, provided you are a member of the Board of
Directors during such period.

   
 

If you are agreeable to
the forgoing, please execute this letter below in the space provided.  Again, we are pleased to have you with us

Very truly yours,

/s/ Jack Conner

Jack Conner,

Chairman of the Board

	
  AGREED:

  
	
   

  
	
   

  
	
  /s/ John J.
  Hounslow

  	
   

  
	
  John J. Hounslow

  

 

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