Document:

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                                                                    EXHIBIT 10.4

                                    FORM OF
                        SEVERANCE COMPENSATION AGREEMENT
                          Dated as of ______  __, 1999
                                    Between
                            PACIFIC MERCANTILE BANK
                                      And
                                 _____________

     The Board of Directors of Pacific Mercantile Bank, a California Corporation
(the "Company") has determined that it is appropriate to reinforce and encourage
the continued attention and dedication of members of the Company's management,
including ________, the Company's ________________ Officer (the "Executive"), to
their assigned duties without distraction in potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.

     This Agreement sets forth the severance compensation which the Company
agrees it will pay to the Executive if the Executive's employment with the
Company terminates under one of the circumstances described herein following a
Change in Control of the Company (as defined in Section 2).

     1.  Term.  The term of this Agreement shall commence on the date hereof
         ----
and, subject to earlier termination pursuant to Section 3(b), 3(c) or 3(d)
hereof, shall end three (3) years following the date on which notice of non-
renewal or termination of this Agreement is given by either the Company or
Executive to the other.  Thus, this Agreement shall be renewable automatically
on a daily basis so that the outstanding term is always three (3) years
following any effective notice of non-renewal or of termination given by the
Company or Executive, other than in the event of a termination pursuant to
Section 3(b), 3(c) or 3(d) hereof.

     2.  Change in Control.  For purposes of this Agreement, a "Change in
         -----------------
Control" of the Company shall be deemed to have occurred if:

          2.1  there shall be consummated:

               (a) any consolidation or merger of the Company, in which the
     Company or such Parent is not the continuing or surviving corporation or
     pursuant to which shares of the Company's Common Stock would be converted
     into cash, securities or other property, other than a merger of the Company
     in which the holders of the Company's Common Stock immediately prior to the
     merger have substantially the same proportionate ownership of at least 65%
     of common stock of the surviving corporation immediately after the merger,
     or

               (b) any sale, lease, exchange or other transfer (in one
     transaction or a series of related transactions) of all, or substantially
     all, of the assets of the Company other than to a corporation in which the
     persons who were the holders of the Company's Common Stock immediately
     prior to such transaction have substantially the same proportionate
     ownership of at least 65% of the common stock of such corporation, or

          2.2  the stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company, or

          2.3  any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall
become the beneficial owner (within the
<PAGE>

meaning of Rule 13d-3 under the Exchange Act) of 20% or more of the Company's
outstanding shares of Common Stock, other than any such person who has record or
beneficial ownership of at least 10% of the Company's outstanding shares of
Common Stock on the date hereof and any persons who acquire shares of stock in
the Company by purchasing shares in a firmly underwritten public offering by the
Company, except for any such transaction in which such person is a corporation
and immediately after such acquisition of beneficial ownership the persons who
were the holders of the Company's Common Stock immediately prior to such
transaction shall have substantially the same proportionate ownership of at
least 65% of the common stock of such corporation; or

          2.4  during any period of two consecutive years during the term of
this Agreement, individuals who at the beginning of the two year period
constituted the entire Board of Directors do not for any reason constitute a
majority thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period.

     If, during the term of this Agreement, another corporation acquires
beneficial ownership of more than 65% of the Company's outstanding shares in a
transaction that does not constitute a Change in Control of the Company, within
the meaning of the above provisions of this Section 2.4, and if during the
remaining term of this Agreement and while that corporation (a "Parent
Corporation") continues to be the beneficial owner of more than 65% of the
Common Stock of the Company, there occurs one of the transactions described
above in Sections 2.1, 2.2, 2.3 or 2.4 with respect to that Parent Corporation,
such transaction shall constitute a Change in Control of the Company for
purposes of this Agreement.

     3.  Termination Following Change in Control.
         ---------------------------------------

          3.1  Executive shall become entitled to receive the compensation
provided for in Section 4 hereof if, and only if, a Change in Control of the
Company shall have occurred while the Executive is still an employee of the
Company, and there subsequently occurs a termination of the Executive's
         ---
employment:

               (a) By Executive for Good Reason (as defined in Section 3.5
     below); or

               (b) By the Company for any reason other than (i) Executive's
     death;  (ii) Executive's Disability (as defined in Section 3.2 below),
     (iii) Executive's reaching Retirement Age (as defined in Section 3.3
     below), or (iv) Cause (as defined in Section 3.4 below).

          3.2  Death or Disability.  If, as a result of the Executive's
               -------------------
incapacity due to physical or mental illness, the Executive is absent from his
duties with the Company on a full-time basis for five months, the Company may
elect to terminate his employment and this Agreement for "Disability" by written
notice to Executive; provided, however, that any such termination shall be
effective only at the end of thirty (30) days following the delivery of such
notice and only if Executive fails to return to the full-time performance of
duties by the end of such 30-day notice period.  Executive's employment and this
Agreement also shall terminate immediately in the event of the death of the
Executive occurring at any time during the term hereof.  Executive shall not be
entitled to any compensation under this Agreement by reason of the termination
of his employment and/or the termination of this Agreement due to his Disability
or death, even if such termination occurs subsequent to a Change in Control.

          3.3  Retirement or Voluntary Resignation.  This Agreement shall
               -----------------------------------
terminate automatically on Retirement (as hereinafter defined) of Executive or
due to the resignation or termination by Executive of his employment for any
reason other than Good Reason (as hereinafter defined).  The Company shall have
no obligation to pay and Executive shall have no right to receive any
compensation

                                       2
<PAGE>

under this Agreement on or due to such Retirement or the Executive's resignation
or termination of employment other than for Good Reason, even such termination
occurs subsequent to a Change in Control.  The term "Retirement" as used in this
Agreement shall mean termination by the Company or the Executive of the
Executive's employment or of this Agreement based on the Executive's having
reached age 65 or such other age as shall have been fixed in any arrangement
established with the Executive's consent with respect to the Executive.

          3.4  Cause.  The Company may terminate Executive's Employment and/or
               -----
this Agreement for Cause (as hereinafter defined) and the Company shall have no
obligation to pay and the Executive shall have no right to receive any
compensation hereunder by reason of any such termination, even if it occurs
following a Change in Control.  The term "Cause" for purposes of this Agreement
shall have the meaning given to it Exhibit A hereto.  Notwithstanding the
foregoing, the Executive shall not be deemed, for purposes of this Agreement, to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the Executive engaged in conduct
that constitutes grounds for a termination of his employment for Cause and
specifying the particulars thereof in reasonable detail.

          3.5  Good Reason.  If, prior to the termination of this Agreement,
               -----------
there occurs:  (i) first a Change in Control and (ii) then, within the
succeeding two years any of the events or circumstances described below in this
Section 3.5 occurs, and (iii) Executive terminates his employment in the manner
and within the applicable time period set forth hereinafter, Executive shall
become entitled to receive the severance compensation set forth in Section 4 of
this Agreement. Any such termination shall constitute a termination for "Good
Reason." For purposes of this Agreement "Good Reason" shall mean any of the
following (without the Executive's express written consent) that occurs either
as a result of, or after the occurrence of, any Change in Control:

               (a) The Company has materially changed the Executive's position,
     duties, responsibilities, status, or offices as in effect immediately prior
     to a Change in Control of the Company or has removed the Executive from or
     failed to reelect the Executive to any of such positions, except in
     connection with the termination of his employment for Disability,
     Retirement or Cause or as a result of the Executive's death or Retirement;

               (b) A reduction by the Company in the Executive's base salary as
     in effect on the date hereof or as the same may be increased from time to
     time during the term of this Agreement, or the Company's failure to
     increase (within 12 months of the Executive's last increase in base salary)
     the Executive's base salary after a Change in Control of the Company in an
     amount which at least equals, on a percentage basis, the average percentage
     increase in base salary for all officers of the Company effected in the
     preceding 12 months;

               (c) Any failure by the Company to continue in effect any benefit
     plan or arrangement (including, without limitation, the Company's life
     insurance, accident, disability and health insurance plans, 401(k) and
     bonus plans, stock options, and all other similar plans which are from time
     to time made generally available to senior executives of the Company and in
     which the Executive is participating at the time of a Change in Control of
     the Company, unless replaced by any other plan providing the Executive with
     substantially similar benefits (hereinafter referred to as "Benefit
     Plans"), or the taking of any action by the Company which would adversely
     affect the Executive's participation in or materially reduce the
     Executive's benefits under any such Benefit Plan or deprive the Executive
     of any material fringe benefit enjoyed by the Executive at

                                       3
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     the time of a Change in Control of the Company which adversely affects
     Executive in a manner materially different from other executives of the
     Company;

               (d) Any failure by the Company to continue in effect any
     incentive compensation plan or arrangement (including, without limitation,
     the Company's plans enumerated in paragraph (c) above and similar incentive
     compensation benefits) in which the Executive is participating at the time
     of a Change in Control of the Company, unless replaced by any other plans
     or arrangements providing him with substantially similar benefits
     (hereinafter referred to as "Incentive Plans"), or the taking of any action
     by the Company which would adversely affect the Executive's participation
     in any such Incentive Plan or reduce the Executive's potential benefits
     under any such Incentive Plan, expressed as a percentage of his base
     salary, by more than 10 percentage points in any fiscal year as compared to
     the immediately preceding fiscal year;

               (e) A relocation of the Company's principal executive offices to
     a location outside of Orange County, California, or the Executive's
     relocation to any place other than the location at which the Executive
     performed the Executive's duties at the time of the Change in Control of
     the Company, except for required travel by the Executive on the Company's
     business to an extent substantially consistent with the Executive's
     business travel obligations during the 12 months immediately preceding a
     Change in Control of the Company;

               (f) Any failure by the Company to provide the Executive with the
     number of paid vacation days to which the Executive is entitled at the time
     of a Change in Control of the Company;

               (g) Any material breach by the Company of any provision of this
     Agreement which it fails to cure within 15 days of written notice thereof
     from the Executive; or

               (h) Any failure by the Company to obtain the assumption of this
     Agreement by any purchaser of all or substantially all of the assets of the
     Company which constitutes a Change in Control of the Company; or

          To constitute a Termination for Good Reason, the Executive must give
written notice of the termination by him of his employment to the Company within
45 days of the occurrence of the event constituting Good Reason, which shall
describe such event in reasonable detail.  If the Company fails to cure such
event within the succeeding 10 days, such termination shall be effective at the
end of such 10 day period and Executive shall thereupon become entitled to
receive the compensation and benefits set forth in Section 4 hereof.

          3.6  Notice of Termination.  Any termination by the Company other than
               ---------------------
pursuant to Section 3.2 due to Executive' Disability, or for Cause pursuant to
Section 3.4, shall be communicated by a Notice of Termination.  For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate those specific termination provisions in this Agreement relied
upon and which set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provisions so indicated.  For purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of
Termination.

     4.  Severance Compensation upon Termination of Employment.  Subject to
         -----------------------------------------------------
Section 4.5 below, if, within two years following a Change in Control, the
Company shall terminate Executive's employment for any reason other than other
than those set forth in Section 3.2, 3.3 or 3.4 above, or if the Executive shall
terminate his employment for Good Reason, then:

                                       4
<PAGE>

          4.1  The Company shall pay to the Executive as severance pay a lump
sum, in cash, in full on the fifth day following the Date of Termination in an
amount equal to ____ months' of the Executive's highest annual base salary in
effect during the 12-month period immediately preceding the Date of Termination,
and (ii) the amount of any bonus that was earned by Executive and was no longer
subject to any contingencies prior to the Date of Termination.  All payments
hereunder shall be made net of withholdings required by applicable federal,
state or local laws.

          4.2  The Company shall continue for a period of ___ months from the
Date of Termination to provide the following benefits to the Executive if and to
the extent he was receiving such benefits on the day immediately preceding the
Date of Termination:

               (a) Participation in the Company's medical, dental and vision
     plans; and

               (b) Long-term disability insurance.

Provided however, that any benefits payable under this subsection 4.4 shall
----------------
terminate at such time as the Executive becomes eligible for similar benefits
from any subsequent employer.

          4.3  Limitation.  To the extent that any or all of the payments and
               ----------
benefits provided for in this Agreement constitute "parachute payments" within
the meaning of Section 280G of the Internal Revenue Code (the "Code") and, but
for this Section 4.3, would be subject to the excise tax imposed by Section 4999
of the Code, the aggregate amount of such payments and benefits shall be reduced
such that the present value thereof (as determined under the Code and applicable
regulations) is equal to 2.99 times the Executive's "base amount" (as defined in
the Code).  The determination of any reduction of any payment or benefits under
this Section 4 pursuant to the foregoing provision shall be made by a nationally
recognized public accounting firm chosen by the Company in good faith, and such
determination shall be conclusive and binding on the Company and the Executive.

     5.  Termination without Cause in the Absence of a Change in Control.  In
         ---------------------------------------------------------------
the event that, during the term of this Agreement, the Company terminates
Executive's employment for any reason other than (i) Executive's death; (ii)
Executive's Disability (as defined in Section 3.2), (iii) Executive's reaching
Retirement Age (as defined in Section 3.3), or (iv) Cause (as defined in Section
3.4) and there has not been a Change in Control (a "Section 5 Termination"),
then Executive shall be entitled to receive the following compensation:

          5.1  The Company shall pay to the Executive as severance pay an amount
equal to six (6) months' of the Executive's highest annual base salary in effect
during the 12-month period immediately preceding the date of such Section 5
Termination, and (ii) the amount of any bonus that was earned by Executive and
was no longer subject to any contingencies prior to the date of such Section 5
Termination, which amounts shall be paid in 12 semi-monthly payments following
such date.  All payments hereunder shall be made net of withholdings required by
applicable federal, state or local laws.

          5.2  The Company shall, for a period of six (6) months from the date
of such Section 5 Termination, continue to provide the following benefits to the
Executive if and to the extent he was receiving such benefits on the day
immediately preceding the date of such Termination:

               (a) Participation in the Company's medical, dental and vision
     plans; and

               (b) Long-term disability insurance.

Provided however, that any benefits payable under this subsection 5.2 shall
----------------
terminate at such time as the Executive becomes eligible for similar benefits
from any subsequent employer.

                                       5
<PAGE>

     6.  No Obligation to Mitigate Damages; No Effect on Other Contractual
         -----------------------------------------------------------------
Rights.
------

          (a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor, except as set forth in whichever of Section 4.2 or
5.2 is applicable, shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the date of the termination of
Executive's employment, provided such other employer is not a competitor of the
Company.

          (b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue to the
date of the termination of Executive's employment, whether pursuant to Section
3.1 or Section 5, solely as a result of the passage of time, under any Benefit
Plan or Incentive Plan, or other written contract, plan or arrangement to which
the Company is a party.

     7.  Successor to the Company.
         ------------------------

          (a) The Company will require any successor or assignee to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably satisfactory to the Executive, expressly,
absolutely and unconditionally to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.  Any failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assignee to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 7 or
which otherwise becomes bound by all of the terms and provisions of this
Agreement by operation of law.  If at any time during the term of this Agreement
the Executive is employed by any corporation a majority of the voting securities
of which is then owned by the Company, "Company" as used in Sections 8, 13 and
14 of this Agreement shall in addition include such employer.  In such event,
the Company agrees that it shall pay or shall cause such employer to pay any
amounts that become due and payable to the Executive pursuant to whichever of
Section 4 or Section 5 hereof is applicable.

          (b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.  If the Executive should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.

     8.  Release of Claims.  The obligations of the Company under Section 4 of
         -----------------
this Agreement shall constitute the only obligations and liability of the
Company arising from a termination of Executive's employment under the
circumstances set forth in Section 3.1 hereof following a Change in Control of
the Company and the obligations and liability of the Company under Section 5 of
this Agreement shall constitute the only obligations of the Company arising from
a termination of Executive's employment under the circumstances set forth in
Section 5 hereof.  Upon the Company's tender of payment hereunder pursuant to
Section 4, or completion of the installment payments under Section 5, as the
case may be, the Company shall have no obligation to Executive by reason of his
employment or the termination thereof other than those set forth herein, and the
Executive agrees that receipt of such payment shall constitute a full and final
settlement and release of all claims or rights against the Company whether under
this Agreement or any other employment contract or agreement, that the Company
has

                                       6
<PAGE>

with the Executive, and Executive shall execute all appropriate agreements
reflecting such settlement and release.

     9.  Notice.  For purposes of this Agreement, notices and all other
         ------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return-receipt requested, postage- prepaid, as follows:

     If to the Company:                     If to Executive

     President                              _________________________________
     Pacific Mercantile Bank                _________________________________
     450 Newport Center Drive, Suite 100    _________________, CA  9_____
     Newport Beach, CA  92660

or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

     10.  Amendments and Waivers.  No provisions of this Agreement may be
         ----------------------
amended, modified, waived or discharged unless such amendment, modification,
waiver or discharge is set forth in a writing signed by the Executive and the
Company.  No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

     11.  Validity.  The invalidity or unenforceability of any provisions of
          --------
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

     12.  Counterparts.  This Agreement may be executed in one or more
          ------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

     13.  Governing Law; Legal Proceedings, Fees and Expenses; Waiver of Jury
          -------------------------------------------------------------------
Trial.  This Agreement shall be governed by and construed in accordance with the
-----
laws of the State of California.  In the event any controversy, claim or dispute
arises between the parties hereto relating to this Agreement, the California
Superior Court for the County of Orange shall have exclusive jurisdiction over
such controversy claim or dispute, and each party further agrees (i) to accept
and not challenge the subject matter or the personal jurisdiction or the venue
of such court, (ii) that it shall not assert the defense of forum nonconviens,
and (iii) that it shall accept service of process in any such proceeding by
registered or certified mail. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH PARTY
EXPRESSLY AND IRREVOCABLY WAIVES ANY RIGHT IT OR HE MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY SUCH CONTROVERSY, CLAIM OR DISPUTE AND EXPRESSLY AND
IRREVOCABLY AGREES THAT THE JUDGE SHALL BE THE SOLE TRIER OF FACT IN ANY SUCH
PROCEEDING.  EACH PARTY IS AWARE THAT THE RIGHT TO A TRIAL BY JURY IS A
CONSTITUTIONAL RIGHT AND REPRESENTS THAT SUCH PARTY IS HEREBY WAIVING
VOLUNTARILY AND WITH AN UNDERSTANDING OF THE CONSEQUENCES THEREOF.  The Company
shall pay all legal fees and expenses which the Executive may incur as a result
of the Company's contesting the validity, enforceability or the Executive's
interpretation of, or determinations under, this Agreement unless the Company
prevails in such contest.

                                       7
<PAGE>

     14.  Confidentiality.  The Executive shall retain in confidence any and all
          ---------------
confidential information known to the Executive concerning the Company and its
business so long as such information is not otherwise publicly disclosed.

     15.  Entire Agreement.  This Agreement contains all of the terms agreed
          ----------------
upon between the Executive and the Company with respect to the subject matter
hereof and replaces and supersedes all prior severance agreements between the
Executive and the Company.

     16.  Headings and Interpretation.  This Agreement is the result of arms'-
          ---------------------------
length negotiations between the parties hereto and no provision of this
Agreement, because of any ambiguity found to be contained herein, shall be
construed against a party by reason of the fact that such party or its legal
counsel was the draftsman of that provision.  Unless otherwise indicated
elsewhere in this Agreement, (a) the term "or" shall not be exclusive, (b) the
term "including" shall mean "including, but not limited to," and (c) the terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific section,
subsection, paragraph or clause where such terms may appear.  The Section and
paragraph headings in this Agreement are included for convenience of reference
and shall not be considered in interpreting, construing or giving effect to any
of the provisions of this Agreement.

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

"COMPANY"                                    "EXECUTIVE"

PACIFIC MERCANTILE BANCORP

By:
   --------------------------------------    -----------------------------------
   Raymond E. Dellerba, President and CEO

                                       8
<PAGE>

                                   EXHIBIT A

                              DEFINITION OF CAUSE

     As used in this Severance Compensation Agreement herein, the term "Cause"
means any of the following:

        (1)  The failure of Executive to perform, in all material respects, the
duties assigned to him or her by such the President or Board of Directors of the
Company, which continues unremedied for a period of 30 days following the
receipt by Executive of a notice of such failure;

        (2)  The commission by the Executive of a felony, or of a misdemeanor
involving moral turpitude;

        (3)  The breach of any duties of Executive under any non-competition,
confidentiality or trade secret or invention transfer or similar agreement
entered into by the Executive with the Company;

        (4)  The commission of an action or an omission to act on the part of
the Executive which results in the incurrence by the Company of any criminal
liability or any material civil liability,

        (5)  Any violation of any material policies established by the Company
that is not remedied within a period of 15 days following the receipt by
Executive of a notice of such violation; and

        (6)  the issuance of an order, directive, instruction, recommendation or
report by any federal or state regulatory agency having jurisdiction over the
Company that leads the Board of Directors to determine, in good faith, that it
would be in the best interests of the Company to terminate Executive's
employment due to criticism of such Executive's performance by any such agency.<PAGE>

[Confidential treatment is being sought for certain portions of this Exhibit, as
indicated by a "[*]" symbol and footnoted as "omitted pursuant to Rule 406."
Such omitted portions have been filed with the Securities and Exchange
Commission.]

                                                                   EXHIBIT 10.10

                                                           Agreement Number:

                                   AGREEMENT

                                    between

                             FISERV SOLUTIONS, INC.
                       1615 Murray Canyon Road, Suite 505
                            San Diego, CA 92108-4319

                                      and

                            Pacific Mercantile Bank
                           450 Newport Center Drive
                        Newport Beach, California 92660

                            Date: September 15, 1998

                                       Fiserv
<PAGE>

AGREEMENT dated as of September 15, 1998 ("Agreement") between FISERV SOLUTIONS,
INC., a Wisconsin corporation ("Fiserv"), and Pacific Mercantile Bank, a
California corporation ("Client").

===============================================================================

   Fiserv and Client hereby agree as follows:

   1.  Term.  The initial term of this Agreement shall be five (5) years and,
       ----
unless written notice of non-renewal is provided by either party at least 180
days prior to expiration of the initial term or any renewal term, this Agreement
shall automatically renew for a renewal term of five (5) years.  This Agreement
shall commence on the earliest of the day Fiserv Services (as defined below) are
first used by Client or January 31, 1999.

   2.  Services.  (a) Services Generally.  Fiserv, itself and through its
       --------       ------------------
affiliates, agrees to provide Client, and Client agrees to obtain from Fiserv
services ("Services") and products ("Products") (collectively, "Fiserv
Services") described in the attached Exhibits:

   Exhibit A - Account Processing Services
   Exhibit L - Material Purchased Through Fiserv
   Exhibit M - Software Products

   The Exhibits set forth specific terms and conditions applicable to the
Services and/or Products, and, where applicable, the Fiserv affiliate so
performing.  Client may select additional services and products from time to
time by incorporating an appropriate Exhibit to this Agreement.

   (b) Conversion Services.  Fiserv will convert Client's existing applicable
       -------------------
data and/or information to the Fiserv Services.  Those activities designed to
transfer the processing from Client's present servicer to the Fiserv Services
are referred to as "Conversion Services".  Client agrees to cooperate with
Fiserv in connection with Fiserv's provision of Conversion Services and to
provide all necessary information and assistance to facilitate the conversion.
Client is responsible for all out-of-pocket expenses associated with the
Conversion Services.  Fiserv will provide Conversion Services as required in
connection with Fiserv Services.

   (c) Training Services.  Fiserv shall provide training, training aids, user
       -----------------
manuals, and other documentation for Client's use as Fiserv finds necessary to
enable Client personnel to become familiar with Fiserv Services.  If requested
by Client, classroom training in the use and operation of Fiserv Services will
be provided at a training facility designated by Fiserv.  All such training aids
and manuals remain Fiserv's property.

   3.  Fees for Fiserv Services.  (a) General.  Client agrees to pay Fiserv:
       ------------------------       -------

   (i) estimated fees for Fiserv Services for the following month as specified
   in the Exhibits;
   (ii) estimated out-of-pocket charges for the following month payable by
   Fiserv for the account of Client; and
   (iii) estimated Taxes (as defined below) thereon (collectively, "Estimated
   Fees").

Fiserv shall timely reconcile Estimated Fees paid by Client for the Fiserv
Services for the month and the fees and charges actually due Fiserv based on
Client's actual use of Fiserv Services for such month.  Fiserv shall either
issue a credit to Client or provide Client with an invoice for any additional
fees or other charges owed.  Fiserv may change the amount of Estimated Fees
billed to reflect appropriate changes in actual use of Fiserv Services.
Estimated Fees may be increased from time to time as set forth in the Exhibits.
Upon notification to and acceptance by Client, Fiserv may increase its fees in
excess of amounts listed in the Exhibits in the event that Fiserv implements
major system enhancements to comply with changes in law, government regulation,
or industry practices.

   (b) Additional Charges.  Fees for out-of-pocket expenses, such as telephone,
       ------------------
microfiche, courier, and other charges incurred by Fiserv for goods or services
obtained by Fiserv on Client's behalf shall be billed to Client at cost plus the
applicable Fiserv administrative fee.  Such out-of-pocket expenses may be
changed from time to time upon notification of a fee change from a
vendor/provider.

   (c) Taxes.  Fiserv shall add to each invoice any sales, use, excise, value
       -----
added, and other taxes and duties however designated that are levied by any
taxing authority relating to the Fiserv Services ("Taxes").  In no event shall
"Taxes" include taxes based upon the net income of Fiserv.
<PAGE>

   (d) Exclusions.  The Estimated Fees do not include, and Client shall be
       ----------
responsible for, furnishing transportation or transmission of information
between Fiserv's service center(s), Client's site(s), and any applicable
clearing house, regulatory agency, or Federal Reserve Bank.

   (e) Payment Terms.  Estimated Fees are due and payable monthly upon receipt
       -------------
of invoice.  Client shall pay Fiserv through the Automated Clearing House.  In
the event any amounts due remain unpaid beyond the 30th day after payment is
due, Client shall pay a late charge of 1.5% per month.  Client agrees that it
shall neither make nor assert any right of deduction or set-off from Estimated
Fees on invoices submitted by Fiserv for Fiserv Services.

   4.  Access to Fiserv Services.  (a) Procedures.  Client agrees to comply with
       -------------------------       ----------
applicable regulatory requirements and procedures for use of Services
established by Fiserv.

   (b) Changes.  Fiserv continually reviews and modifies Fiserv systems used in
       -------
the delivery of Services (the "Fiserv System") to improve service and comply
with government regulations, if any, applicable to the data and information
utilized in providing Services.  Fiserv reserves the right to make changes in
Services, including but not limited to operating procedures, type of equipment
or software resident at, and the location of Fiserv's service center(s).  Fiserv
will notify Client of any material change that affects Client's normal operating
procedures, reporting, or service costs prior to implementation of such change.

   (c) Communications Lines.  Fiserv shall order the installation of appropriate
       --------------------
communication lines and equipment to facilitate Client's access to Services.
Client understands and agrees to pay charges relating to the installation and
use of such lines and equipment as set forth in the Exhibits.

   (d) Terminals and Related Equipment.  Client shall obtain necessary and
       -------------------------------
sufficient terminals and other equipment, approved by Fiserv and compatible with
the Fiserv System, to transmit and receive data and information between Client's
location(s), Fiserv's service center(s), and/or other necessary location(s).
Fiserv and Client may mutually agree to change the type(s) of terminal and
equipment used by Client.

   5.  Client Obligations.  (a) Input.  Client shall be solely responsible for
       ------------------       -----
the input, transmission, or delivery to and from Fiserv of all information and
data required by Fiserv to perform Services unless Client has retained Fiserv to
handle such responsibilities, as specifically set forth in the Exhibits.  The
information and data shall be provided in a format and manner approved by
Fiserv.  Client will provide at its own expense or procure from Fiserv all
equipment, computer software, communication lines, and interface devices
required to access the Fiserv System.  If Client has elected to provide such
items itself, Fiserv shall provide Client with a list of compatible equipment
and software; Client agrees to pay Fiserv's standard fee for recertification of
the Fiserv System resulting therefrom.

   (b) Client Personnel.  Client shall designate appropriate Client personnel
       ----------------
for training in the use of the Fiserv System, shall supply Fiserv with
reasonable access to Client's site during normal business hours for Conversion
Services and shall cooperate with Fiserv personnel in their performance of
Services, including Conversion Services.

   (c) Use of Fiserv System.  Client shall (i) comply with any operating
       --------------------
instructions on the use of the Fiserv System provided by Fiserv; (ii) review all
reports furnished by Fiserv for accuracy; and (iii) work with Fiserv to
reconcile any out of balance conditions.  Client shall determine and be
responsible for the authenticity and accuracy of all information and data
submitted to Fiserv.

   (d) Client's Systems.  Client shall be responsible for ensuring that its
       ----------------
systems are Year 2000 compliant and capable of passing and/or accepting date
formats from and/or to the Fiserv System.

   6.  Ownership and Confidentiality.  (a) Definition.
       -----------------------------       ----------

   (i) Client Information.  "Client Information" means:  (A) confidential plans,
       ------------------
   customer lists, information, and other proprietary material of Client that is
   marked with a restrictive legend, or if not so marked with such legend or is
   disclosed orally, is identified as confidential at the time of disclosure
   (and written confirmation thereof is promptly provided to Fiserv); and (B)
   any information and data concerning the business and financial records of
   Client's customers prepared by or for Fiserv, or used in any way by Fiserv in
   connection with the provision of Fiserv Services (whether or not any such
   information is marked with a restrictive legend).

   (ii) Fiserv Information. "Fiserv Information" means:  (A) confidential plans,
        ------------------
   information, research, development, trade secrets, business affairs
   (including that of any Fiserv client, supplier, or affiliate), and other
   proprietary material of Fiserv that is marked with a restrictive legend, or
   if not so marked with such legend or is disclosed orally, is identified as
   confidential at the time of disclosure (and written confirmation thereof is
   promptly provided to Client); and (B) Fiserv's proprietary computer programs,
   including custom software modifications, software documentation and training
   aids, and all data, code, techniques, algorithms, methods, logic,
   architecture, and designs embodied or incorporated therein (whether or not
   any such information is marked with a restrictive legend).
<PAGE>

   (iii) Information.  "Information" means Client Information and Fiserv
         -----------
   Information.  No obligation of confidentiality applies to any Information
   that the receiving party ("Recipient") (A) already possesses without
   obligation of confidentiality; (B) develops independently; or (C) rightfully
   receives without obligation of confidentiality from a third party.  No
   obligation of confidentiality applies to any Information that is, or becomes,
   publicly available without breach of this Agreement.

   (b) Obligations.  Recipient agrees to hold as confidential all Information it
       -----------
receives from the disclosing party ("Discloser").  All Information shall remain
the property of Discloser or its suppliers and licensors.  Information will be
returned to Discloser at the termination or expiration of this Agreement.
Recipient will use the same care and discretion to avoid disclosure of
Information as it uses with its own similar information that it does not wish
disclosed, but in no event less than a reasonable standard of care.  Recipient
may use Information for any purpose that does not violate such obligation of
confidentiality.  Recipient may disclose Information to (i) employees and
employees of affiliates who have a need to know; and (ii) any other party with
Discloser's written consent.  Before disclosure to any of the above parties,
Recipient will have a written agreement with such party sufficient to require
that party to treat Information in accordance with this Agreement.  Recipient
may disclose Information to the extent required by law.  However, Recipient
agrees to give Discloser prompt notice so that it may seek a protective order.
The provisions of this sub-section survive any termination or expiration of this
Agreement.

   (c) Residuals.  Nothing contained in this Agreement shall restrict Recipient
       ---------
from the use of any ideas, concepts, know-how, or techniques contained in
Information that are related to Recipient's business activities ("Residuals"),
provided that in so doing, Recipient does not breach its obligations under this
Section.  However, this does not give Recipient the right to disclose the
Residuals except as set forth elsewhere in this Agreement.

   (d) Fiserv System.  The Fiserv System contains information and computer
       -------------
software that are proprietary and confidential information of Fiserv, its
suppliers, and licensors.  Client agrees not to attempt to circumvent the
devices employed by Fiserv to prevent unauthorized access to the Fiserv System,
including, but not limited to, alterations, decompiling, disassembling,
modifications, and reverse engineering thereof.

   (e) Confidentiality of this Agreement.  Fiserv and Client agree to keep
       ---------------------------------
confidential the prices, terms and conditions of this Agreement, without
disclosure to third parties.

   7.  Regulatory Agencies, Regulations and Legal Requirements.  (a) Client
       -------------------------------------------------------       ------
Files.  Records maintained and produced for Client ("Client Files") may be
-----
subject to examination by such Federal, State, or other governmental regulatory
agencies as may have jurisdiction over Client's business to the same extent as
such records would be subject if maintained by Client on its own premises.
Client agrees that Fiserv is authorized to give all reports, summaries, or
information contained in or derived from the data or information in Fiserv's
possession relating to Client when formally requested to do so by an authorized
regulatory or government agency.

   (b) Compliance with Regulatory Requirements.  Client agrees to comply with
       ---------------------------------------
applicable regulatory and legal requirements, including without limitation:

   (i) submitting a copy of this Agreement to the appropriate regulatory
   agencies prior to the date Services commence;
   (ii) providing adequate notice to the appropriate regulatory agencies of the
   termination of this Agreement or any material changes in Services;
   (iii) retaining records of its accounts as required by regulatory
   authorities;
   (iv) obtaining and maintaining, at its own expense, any Fidelity Bond
   required by any regulatory or governmental agency; and
   (v) maintaining, at its own expense, such casualty and business interruption
   insurance coverage for loss of records from fire, disaster, or other causes,
   and taking such precautions regarding the same, as may be required by
   regulatory authorities.

   8.  Warranties.  (a) Fiserv Warranties.  Fiserv represents and warrants that:
       ----------       -----------------

   (i)(A) Services will conform to the specifications set forth in the Exhibits;
   (B) Fiserv will perform Client's work accurately provided that Client
   supplies accurate data and information, and follows the procedures described
   in all Fiserv documentation, notices, and advices; (C) Fiserv personnel will
   exercise due care in provision of Services; (D) the Fiserv System will comply
   in all material respects with all applicable Federal and State regulations
   governing Services; and (E) the Fiserv System is or will be Year 2000
   compliant.  In the event of an error or other default caused by Fiserv
   personnel, systems, or equipment, Fiserv shall correct the data or
   information and/or reprocess the affected item or report at no additional
   cost to Client.  Client agrees to supply Fiserv with a written request for
   correction of the error within 7
<PAGE>

   days after Client's receipt of the work containing the error. Work
   reprocessed due to errors in data supplied by Client, on Client's behalf by a
   third party, or by Client's failure to follow procedures set forth by Fiserv
   shall be billed to Client at Fiserv's then current time and material rates;
   and
   (ii) it owns or has a license to furnish all equipment or software comprising
   the Fiserv System.  Fiserv shall indemnify Client and hold it harmless
   against any claim or action that alleges that the Fiserv System use infringes
   a United States patent, copyright, or other proprietary right of a third
   party.  Client agrees to notify Fiserv promptly of any such claim and grants
   Fiserv the sole right to control the defense and disposition of all such
   claims.  Client shall provide Fiserv with reasonable cooperation and
   assistance in the defense of any such claim.

THE WARRANTIES STATED ABOVE ARE LIMITED WARRANTIES AND ARE THE ONLY WARRANTIES
MADE BY FISERV.  FISERV DOES NOT MAKE, AND CLIENT HEREBY EXPRESSLY WAIVES, ALL
OTHER WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.  THE STATED EXPRESS WARRANTIES ARE IN LIEU OF ALL
LIABILITIES OR OBLIGATIONS OF FISERV FOR DAMAGES ARISING OUT OF OR IN CONNECTION
WITH THE DELIVERY, USE, OR PERFORMANCE OF FISERV SERVICES.

   (b) Client Warranties.  Client represents and warrants that: (A) no
       -----------------
contractual obligations exist that would prevent Client from entering into this
Agreement; (B) it has complied with all applicable regulatory requirements; and
(C) Client has requisite authority to execute, deliver, and perform this
Agreement.  Client shall indemnify and hold harmless Fiserv, its officers,
directors, employees, and affiliates against any claims or actions arising out
of (X) the use by Client of the Fiserv System in a manner other than that
provided in this Agreement; and (Y) any and all claims by third parties through
Client arising out of the performance and non-performance of Fiserv Services by
Fiserv, provided that the indemnity listed in clause (Y) hereof shall not
        --------
preclude Client's recovery of direct damages pursuant to the terms and subject
to the limitations of this Agreement.

   9.  Limitation of Liability.  (a) General.  IN NO EVENT SHALL FISERV BE
       -----------------------       -------
LIABLE FOR LOSS OF GOODWILL, OR FOR SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES ARISING FROM CLIENT'S USE OF FISERV SERVICES, OR FISERV'S
SUPPLY OF EQUIPMENT OR SOFTWARE, REGARDLESS OF WHETHER SUCH CLAIM ARISES IN TORT
OR IN CONTRACT.  CLIENT MAY NOT ASSERT ANY CLAIM AGAINST FISERV MORE THAN 2
YEARS AFTER SUCH CLAIM ACCRUED.  FISERV'S AGGREGATE LIABILITY FOR ANY AND ALL
CAUSES OF ACTION RELATING TO SERVICES SHALL BE LIMITED TO THE TOTAL FEES PAID BY
CLIENT TO FISERV FOR SERVICES RESULTING IN SUCH LIABILITY IN THE [*] PERIOD
PRECEDING THE DATE THE CLAIM ACCRUED.  FISERV'S AGGREGATE LIABILITY FOR A
DEFAULT RELATING TO EQUIPMENT OR SOFTWARE SHALL BE LIMITED TO [*].

   (b) Lost Records.  If Client's records or other data submitted for processing
       ------------
are lost or damaged as a result of any failure by Fiserv, its employees, or
agents to exercise reasonable care to prevent such loss or damage, Fiserv's
liability on account of such loss or damages shall not exceed the reasonable
cost of reproducing such records or data from exact duplicates thereof in
Client's possession.

   10.  Disaster Recovery.  (a) General.  Fiserv maintains a disaster recovery
        -----------------       -------
plan ("Disaster Recovery Plan") for each Service.  A "Disaster" shall mean any
unplanned interruption of the operations of or inaccessibility to Fiserv's
service center in which Fiserv, using reasonable judgment, requires relocation
of processing to a recovery location.  Fiserv shall notify Client as soon as
possible after Fiserv deems a service outage to be a Disaster.  Fiserv shall
move the processing of Client's standard services to a recovery location as
expeditiously as possible and shall coordinate the cut-over to back-up
telecommunication facilities with the appropriate carriers.  Client shall
maintain adequate records of all transactions during the period of service
interruption and shall have personnel available to assist Fiserv in implementing
the switchover to the recovery location.  During a Disaster, optional or on-
request services shall be provided by Fiserv only to the extent adequate
capacity exists at the recovery location and only after stabilizing the
provision of base services.

   (b) Communications.  Fiserv shall work with Client to establish a plan for
       --------------
alternative communications in the event of a Disaster.

   (c) Disaster Recovery Test.  Fiserv shall test the Disaster Recovery Plan
       ----------------------
annually. Client agrees to participate in and assist Fiserv with such test, if
requested by Fiserv. Upon Client request, test results will be made available to
Client's management, regulators, auditors, and insurance underwriters.

   (d) Client Plans.  Fiserv agrees to release information necessary to allow
       ------------
Client's development of a disaster recovery plan that operates in concert with
the Disaster Recovery Plan.

   (e) No Warranty.  Client understands and agrees that the Disaster Recovery
       -----------
Plan is designed to minimize, but not eliminate, risks associated with a
Disaster affecting Fiserv's service center(s).  Fiserv does not warrant that
Fiserv Services will be uninterrupted or error free in the event of a Disaster;
no

* Omitted pursuant to Rule 406.
<PAGE>

performance standards shall be applicable for the duration of a Disaster. Client
maintains responsibility for adopting a disaster recovery plan relating to
disasters affecting Client's facilities and for securing business interruption
insurance or other insurance necessary for Client's protection.

   11.  Termination.  (a) Material Breach.  Except as provided elsewhere in this
        -----------       ---------------
Section 11, either party may terminate this Agreement in the event of a material
breach by the other party not cured within 90 days following written notice
stating, with particularity and in reasonable detail, the nature of the claimed
breach.

   (b) Failure to Pay.  In the event any invoice remains unpaid by Client 30
       --------------
days after due, or Client deconverts any data or information from the Fiserv
System without prior written consent of Fiserv, Fiserv, at its sole option, may
terminate this Agreement and/or Client's access to and use of Fiserv Services.
Any invoice submitted by Fiserv shall be deemed correct unless Client provides
written notice to Fiserv within 15 days of the invoice date specifying the
nature of the disagreement.

   (c) Remedies.  Remedies contained in this Section 11 are cumulative and are
       --------
in addition to the other rights and remedies available to Fiserv under this
Agreement, by law or otherwise.

   (d) Defaults.  If Client:
       --------

   (i) defaults in the payment of any sum of money due; or breaches this
   Agreement in any material respect or otherwise defaults in any material
   respect in the performance of any of its obligations and Client fails to cure
   such default or breach within thirty (30) days after receipt of a written
   notice thereof from Fiserv or, if the default or breach is not susceptible of
   cure within such 30-day period, then only if Client fails to commence efforts
   to effectuate a cure thereof within such 30-day period or fails to continue
   to pursue such cure diligently thereafter; or
   (ii) commits an act of bankruptcy or becomes the subject of any proceeding
   under the Bankruptcy Code or becomes insolvent or if any substantial part of
   Client's property becomes subject to any levy, seizure, assignment,
   application, or sale for or by any creditor or governmental agency;

then, in any such event, Fiserv may, upon written notice, terminate this
Agreement and be entitled to recover from Client as liquidated damages an amount
equal to [*]. Client agrees to reimburse Fiserv for any expenses Fiserv may
incur, including reasonable attorneys' fees, in taking any of the foregoing
actions.

   (e) Convenience.  Client may terminate this Agreement during any term by
       -----------
paying a termination fee based on the remaining unused term of this Agreement,
the amount to be determined by [*] books on the date of termination. Client
understands and agrees that Fiserv losses incurred as a result of early
termination of the Agreement would be difficult or impossible to calculate as of
the effective date of termination since they will vary based on, among other
things, the number of clients using the Fiserv System on the date the Agreement
terminates. Accordingly, the amount set forth in the first sentence of this
subsection represents Client's agreement to pay and Fiserv's agreement to accept
as liquidated damages (and not as a penalty) such amount for any such Client
termination.

   (f) Merger.  In the event of a merger between Client and another organization
       ------
in which Client is not the surviving organization and where the other
organization was not previously a user of Fiserv services similar to the
Services, Fiserv will allow an early termination of this Agreement upon the
following terms and conditions:

   (i) written notice must be given 3 months in advance, specifying the
   termination date;
   (ii) Fiserv may specify a deconversion date based on its previous commitments
   and work loads; and
   (iii) Fiserv may charge a termination fee in accordance with subsection (e)
   above.

   (g) Return of Data Files.  Upon expiration or termination of this Agreement,
       --------------------
Fiserv shall furnish to Client such copies of Client Files as Client may request
in Fiserv's standard machine readable format along with such information and
assistance as is reasonable and customary to enable Client to deconvert from the
Fiserv System, provided, however, that Client consents and agrees and authorizes
               --------  -------
Fiserv to retain Client Files until (i) Fiserv is paid in full for (A) all
Services provided through the date such Client Files are returned to Client; and
(B) any and all other amounts that are due or will become due under this
Agreement; (ii) Fiserv is paid its then standard rates for the services
necessary to return such Client Files; (iii) if this Agreement is being
terminated, Fiserv is paid any applicable termination fee pursuant to subsection
(d), (e), or (f) above; and (iv) Client has returned to Fiserv all Fiserv
Information.  Unless directed by Client in writing to the contrary, Fiserv shall
be permitted to destroy Client Files any time after 30 days from the final use
of Client Files for processing.

* Omitted pursuant to Rule 406.
<PAGE>

   (h) Miscellaneous.  Client understands and agrees that Client is responsible
       -------------
for the deinstallation and return shipping of any Fiserv-owned equipment located
on Client's premises.

   12.  Arbitration.  (a) General.  Except with respect to disputes arising from
        -----------       -------
a misappropriation or misuse of either party's proprietary rights, any dispute
or controversy arising out of this Agreement, or its interpretation, shall be
submitted to and resolved exclusively by arbitration under the rules then
prevailing of the American Arbitration Association, upon written notice of
demand for arbitration by the party seeking arbitration, setting forth the
specifics of the matter in controversy or the claim being made.  The arbitration
shall be heard before an arbitrator mutually agreeable to the parties; provided,
that if the parties cannot agree on the choice of arbitrator within 10 days
after the first party seeking arbitration has given written notice, then the
arbitration shall be heard by three arbitrators, one chosen by each party, and
the third chosen by those two arbitrators.  The arbitrators will be selected
from a panel of persons having experience with and knowledge of information
technology and at least one of the arbitrators selected will be an attorney.  A
hearing on the merits of all claims for which arbitration is sought by either
party shall be commenced not later than 60 days from the date demand for
arbitration is made by the first party seeking arbitration.  The arbitrator(s)
must render a decision within 10 days after the conclusion of such hearing.  Any
award in such arbitration shall be final and binding upon the parties and the
judgment thereon may be entered in any court of competent jurisdiction.

   (b) Applicable Law.  The arbitration shall be governed by the United States
       --------------
Arbitration Act, 9 U.S.C. 1-16.  The arbitrators shall apply the substantive law
of the State of Wisconsin, without reference to provisions relating to conflict
of laws.  The arbitrators shall not have the power to alter, modify, amend, add
to, or subtract from any term or provision of this Agreement, nor to rule upon
or grant any extension, renewal, or continuance of this Agreement.  The
arbitrators shall have the authority to grant any legal remedy available had the
parties submitted the dispute to a judicial proceeding.

   (c) Situs.  If arbitration is required to resolve any disputes between the
       -----
parties, the proceedings to resolve the first such dispute shall be held in
Milwaukee, Wisconsin, the proceedings to resolve the second such dispute shall
be held in Los Angeles, California, and the proceedings to resolve any
subsequent disputes shall alternate between Milwaukee, Wisconsin and Los
Angeles, California.

   13.  Insurance.  Fiserv carries the following types of insurance policies:
        ---------

   [*]

   14.  Audit.  Fiserv employs an internal auditor responsible for ensuring the
        -----
integrity of its processing environments and internal controls.  In addition,
Fiserv provides for periodic independent audits of its operations.  Fiserv shall
provide Client with a copy of the audit of the Fiserv service center providing
Services within a reasonable time after its completion and shall charge each
client a fee based on the pro rata cost of such audit.  Fiserv shall also
provide a copy of such audit to the appropriate regulatory agencies, if any,
having jurisdiction over Fiserv's provision of Services.

   15.  General.  (a) Binding Agreement.  This Agreement is binding upon the
        -------       -----------------
parties and their respective successors and permitted assigns.  Neither this
Agreement nor any interest may be sold, assigned, transferred, pledged, or
otherwise disposed of by Client, whether pursuant to change of control or
otherwise, without Fiserv's prior written consent.  Client agrees that Fiserv
may subcontract any Services to be performed hereunder.  Any such subcontractors
shall be required to comply with all applicable terms and conditions.

   (b) Entire Agreement.  This Agreement, including its Exhibits, which are
       ----------------
expressly incorporated herein by reference, constitutes the complete and
exclusive statement of the agreement between the parties as to the subject
matter hereof and supersedes all previous agreements with respect thereto.
Modifications of this Agreement must be in writing and signed by duly authorized
representatives of the parties.  Each party hereby acknowledges that it has not
entered into this Agreement in reliance upon any representation made by the
other party not embodied herein.  In the event any of the provisions of any
Exhibit are in conflict with any of the provisions of this Agreement, the terms
and provisions of this Agreement shall control unless the Exhibit in question
expressly provides that its terms and provisions shall control.

   (c) Severability.  If any provision of this Agreement is held to be
       ------------
unenforceable or invalid, the other provisions shall continue in full force and
effect.

   (d) Governing Law.  This Agreement will be governed by the substantive laws
       -------------
of the State of Wisconsin, without reference to provisions relating to conflict
of laws.  The United Nations Convention of Contracts for the International Sale
of Goods shall not apply to this Agreement.

* Omitted pursuant to Rule 406.
<PAGE>

   (e) Force Majeure.  Neither party shall be responsible for delays or failures
       -------------
in performance resulting from acts reasonably beyond the control of that party.

   (f) Notices.  Any written notice required or permitted to be given hereunder
       -------
shall be given by: (i) Registered or Certified Mail, Return Receipt Requested,
postage prepaid; (ii) confirmed facsimile; or (iii) nationally recognized
courier service to the other party at the addresses listed on the cover page or
to such other address or person as a party may designate in writing.  All such
notices shall be effective upon receipt.

   (g) No Waiver.  The failure of either party to insist on strict performance
       ---------
of any of the provisions hereunder shall not be construed as the waiver of any
subsequent default of a similar nature.

   (h) Financial Statements.  Fiserv shall provide Client and the appropriate
       --------------------
regulatory agencies so requiring a copy of Fiserv, Inc.'s audited consolidated
financial statements.

   (i) Prevailing Party.  The prevailing party in any arbitration, suit, or
       ----------------
action brought against the other party to enforce the terms of this Agreement or
any rights or obligations hereunder, shall be entitled to receive its reasonable
costs, expenses, and attorneys' fees of bringing such arbitration, suit, or
action.

   (j) Survival.  All rights and obligations of the parties under this Agreement
       --------
that, by their nature, do not terminate with the expiration or termination of
this Agreement shall survive the expiration or termination of this Agreement.

   (k) Exclusivity.  Client agrees that Fiserv shall be the sole and exclusive
       -----------
provider of the services that are the subject matter of this Agreement.  For
purposes of the foregoing, the term "Client" shall include Client affiliates.
During the term of this Agreement, Client agrees not to enter into an agreement
with any other entity to provide these services (or similar services) without
Fiserv's prior written consent.  If Client acquires another entity, the
exclusivity provided to Fiserv hereunder shall take effect with respect to such
acquired entity as soon as practicable after termination of such acquired
entity's previously existing arrangement for these services.  If Client is
acquired by another entity, the exclusivity provided to Fiserv hereunder shall
apply with respect to the level or volume of these services provided immediately
prior to the signing of the definitive acquisition agreement relating to such
acquisition and shall continue with respect to the level or volume of these
services until any termination or expiration of this Agreement.

   (l) Recruitment of Employees.  Client agrees not to hire Fiserv's employees
       ------------------------
during the term of this Agreement and for a period of 6 months after any
termination or expiration thereof, except with Fiserv's prior written consent.

          16.  Price Schedule Adjustments.  The prices set forth in Exhibit
               --------------------------
A - 2 may, at Fiserv discretion, be subject to annual adjustments effective on
the first anniversary date of this contract as follows:

The base for computing the CPI fee adjustment is [*]. Charges for Exhibit A
SERVICES, shall be adjusted by the percentage change in CPI recorded over the
most recent twelve (12) month period for which the number is available. The
charges so calculated shall be the new charges for Exhibit A SERVICES. In no
event will the new charges for Exhibit A SERVICES be less than the charges which
existed prior to the adjustment.

Upon determination of each adjustment hereunder, the parties shall prepare a
revised Exhibit A-2 schedule of charges. The charges to Client for SERVICES for
any additional or extended Term shall be subject to increase in this manner.

================================================================================

* Omitted pursuant to Rule 406.
<PAGE>

   IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date indicated below.

For Client:                                For Fiserv:

Pacific Mercantile Bank                    Fiserv Solutions, Inc.

By: /s/ JOHN P. CRONIN                     By: /s/ JAMES LEVAN
   ----------------------------------         ----------------------------------
Name:  John P. Cronin                      Name:  James LeVan
Title: Executive Vice President, CTO       Title: Executive Vice President
Date:  12/14/98                            Date:  12/22/98
     --------------------------------           --------------------------------

/s/ DANIEL L. ERICKSON
Daniel L. Erickson

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