Document:

exv10w16

 

EXHIBIT 10.16

BANK OF COMMERCE HOLDINGS

SALARY CONTINUATION AGREEMENT

FOR PATRICK J. MOTY

This Salary Continuation Agreement (the “Agreement”) is made effective as of April 1, 2006,
and is entered into by and between Bank Of Commerce Holdings, a California corporation (the
“Bank”), and Patrick J. Moty (the “Executive”), each a “Party” and together the “Parties.”

RECITALS

     C.     The Executive is the Executive Vice President and Chief Credit Officer.

     D.      The Bank desires to encourage the Executive to remain the Executive Vice President and
Chief Credit Officer of the Bank by providing salary continuation benefits to the Executive from
the Bank’s general assets as set forth in this Agreement.

AGREEMENT

     In consideration of the mutual promises, covenants, and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged
the Parties agree as follows:

VII.      DEFINITIONS

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

     1.      “Board” means the Board of Directors of the Bank.

     2.      “Change in Control” means (i) a Change in the Ownership of the Relevant Corporation, (ii) a
Change in the Effective Control of the Relevant Corporation, or (iii) or a Change in the Ownership
of a Substantial Portion of the Assets of the Relevant Corporation, as those terms are defined
herein. The events giving rise to the Change in Control must be objectively determinable, and the
Board, in a ministerial capacity, shall certify there is a Change in Control only when the events
giving rise to the Change in Control are objectively determinable. The Board shall not have any
discretionary authority to certify that there has been a Change in Control except as provided in
the preceding sentence. Notwithstanding anything to the contrary, (i) the term “Change in Control”
shall be interpreted in accordance with Section 409A; (ii) any event which constitutes a “Change in
Control” under Section 409A shall constitute a “Change in Control” for purposes of this Agreement;
(iii) and any event which does not constitutes a “Change in Control” under Section 409A shall not
constitute a “Change in Control” for purposes of this Agreement.

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          A.      “Change in the Effective Control of the Relevant Corporation” means either of the
following:

               i.      That one person, or more than one person acting as a group, acquires (or has acquired
during the twelve (12) month period ending on the date of the most recent acquisition by such
person or persons) ownership of stock of the Relevant Corporation possessing thirty-five percent
(35%) or more of the total voting power of the stock of the Relevant Corporation, provided that no
other corporation is a majority shareholder of the Relevant Corporation; or

               ii.      That a majority of the members of the board of directors of the Relevant Corporation are
replaced during any twelve (12) month period by directors whose appointment or election is not
endorsed by a majority of the board members of the Relevant Corporation prior to the date of the
appointment or election, provided that no other corporation is a majority shareholder of the
Relevant Corporation.

          B.      “Change in the Ownership of the Relevant Corporation” means that any one person, or more
than one person acting as a group, acquires ownership of stock of the Relevant Corporation that,
together with stock held by such person or group, constitutes more than fifty percent (50%) of the
total fair market value or total voting power of the stock of the Relevant Corporation. However, if
any one person, or more than one person acting as a group, is considered to own more than fifty
percent (50%) of the total fair market value or total voting power of the stock of the Relevant
Corporation, the acquisition of additional stock by the same person or persons is not considered to
cause a Change in the Ownership of the Relevant Corporation (or to cause a Change in the Effective
Control of the Relevant Corporation as defined herein). An increase in the percentage of stock
owned by any one person, or persons acting as a group, as a result of a transaction in which the
Relevant Corporation acquires its stock in exchange for property will be treated as an acquisition
of stock for purposes of this Agreement. A Change in the Ownership of the Relevant Corporation
only occurs when there is a transfer of stock of the Relevant Corporation (or issuance of stock of
the Relevant Corporation) and stock in the Relevant Corporation remains outstanding after the
transaction.

          C.      “Change in the Ownership of a Substantial Portion of the Assets of the Relevant
Corporation” means that any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve (12) month period ending on the date of the most recent acquisition by
such person or persons) assets from the Relevant Corporation that have a total gross fair market
value equal to or more than forty percent (40%) of the total gross fair market value of all of the
assets of the Relevant Corporation immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of the Relevant Corporation, or the
value of the assets being disposed of, determined without regard to any liabilities associated with
such assets.

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          D.      “Relevant Corporation” means (i) the corporation for whom the Executive is performing
services at the time of the Change in Control event; (ii) the corporation that is liable for the
payment of the deferred compensation under this Plan; or (iii) a corporation that is a majority
shareholder of a corporation identified in sections (i) or (ii) above, or any corporation in a
chain of corporations in which each corporation is a majority shareholder of another corporation in
the chain, ending in a corporation identified in sections (i) or (ii) above. A majority
shareholder is a shareholder owning more than fifty percent (50%) of the total fair market value
and total voting power of such corporation. Stock underlying a vested option is considered owned
by the individual who holds the vested option, and the stock underlying an unvested option is not
considered owned by the individual who holds the unvested option. However, if a vested option is
exercisable for stock that is not substantially vested, the stock underlying the option is not
treated as owned by the individual who holds the option.

     3.      “Change of Control Annual Benefit” means the Change of Control Annual Benefit amount set
forth in Schedule A for the Plan Year ending immediately prior to the date in which a Change of
Control occurs. Notwithstanding the foregoing, if a Change of Control occurs during the first Plan
Year, the Change of Control Annual Benefit shall be the Change of Control Annual Benefit set forth
in Schedule A for Plan Year One.

     4.      “Code” means the Internal Revenue Code of 1986, as amended.

     5.      “Disability” or “Disabled” means: (i) if the Executive is covered by a Bank-sponsored
disability policy, total disability as defined in such policy without regard to any waiting period,
provided the definition of total disability in such policy is consistent with the definition of
“disability” in Section 409A; or (ii) if the Executive is not covered by such a policy, Disability
means the Executive is, in the judgment of a physician who is satisfactory to the Bank, unable to
engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve months. As a condition to receiving any Disability
benefits, the Bank may require the Executive to submit to such physical or mental evaluations and
tests as the Bank’s Board of Directors deems appropriate and reasonable. Notwithstanding anything
to the contrary, the terms “Disability” or “Disabled” shall be interpreted in accordance with
Section 409A.

     6.      “Disability Annual Benefit” means the Disability Annual Benefit amount set forth in
Schedule A for the Plan Year ending immediately prior to the date in which the respective
Termination of Employment occurs. Notwithstanding the foregoing, for Termination of Employment due
to Disability during the first Plan Year, the benefit shall be the Disability Annual Benefit set
forth in Schedule A for Plan Year One.

     7.      “Early Termination” means the Termination of Employment before Normal Retirement Age for
reasons other than death, Disability, Termination for Cause or termination following a Change of
Control.

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     8.      “Early Termination Date” means the month, day and year in which Early Termination occurs.

     9.        “Early Termination Lump Sum” means the amount set forth on Schedule A for the Plan Year
ending immediately prior to the respective Early Termination Date, which benefit is determined by
vesting the Executive in one hundred percent (100%) of the Accrual Balance set forth on Schedule A.

     10.     “Effective Date” means April 1, 2006.

     11.     “Executive Beneficiary” means the beneficiary designated by Executive pursuant to Article
3.

     12.      “Normal Retirement Age” means the Executive’s 61st birthday.

     13.      “Normal Retirement Date” means the later of the Normal Retirement Age or Termination of
Employment.

     14.      “Normal Retirement Annual Benefit” means Thirty Five Thousand Dollars ($35,000.00) per
year.

     15.      “Plan” means this Salary Continuation Agreement.

     16.      “Plan Year” means a twelve (12) month period commencing on April 1 and ending on March 31
of each year. The initial Plan Year shall commence on the Effective Date.

     17.      “Section 409A” means Code Section 409A together with IRS regulations and guidance
promulgated thereunder, as amended from time to time.

     18.      “Specified Employee” means any employee who meets the requirements of a “key employee” set
forth in Code section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations
thereunder and disregarding section 416(i)(5)) at any time during the 12-month period ending on
December 31. If a person is a key employee on any given December 31, the person is treated as a
“Specified Employee” for the 12-month period beginning on April 1 of the next year.

     19.      “Terminated for Cause” or “Termination for Cause” means that Bank terminates the
Executive’s employment for:

          A.      Habitual alcohol abuse or drug addition or abuse;

          B.      Commission of a felony, or acts involving moral turpitude;

          C.      Acts which cause detrimental publicity for the Bank;

          D.      Habitual neglect of duty, willful or gross negligence in carrying out the activities for
which employed, including negligence or neglect in carrying out the directions of the Board, or
willful breach of the obligations of Executive to the Bank, including persistent, malfeasance,
misfeasance or nonfeasance in connection with the performance of Executive’s duties.

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     20.      “Termination of Employment” means that the Executive ceases to be employed by the Bank,
and actually separates from service to the Bank, for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Bank or by Termination for Cause.

VIII.      BENEFITS

     1.      Normal Retirement Benefit.

          A.      Benefit Amount. Upon Termination of Employment on or after the Normal Retirement
Age for reasons other than death, the Bank shall pay to the Executive the Normal Retirement Annual
Benefit for a period of ten years in lieu of any other benefit under this Agreement.

          B.      Payment Terms. The Normal Retirement Annual Benefit shall be paid each year in
twelve (12) equal monthly installments payable on the first day of each month commencing with the
month following the Executive’s Normal Retirement Date, for a period of ten years. Notwithstanding
the foregoing, in the event Executive is a Specified Employee on the Executive’s Normal Retirement
Date, payments made under this section shall commence on the date which is six (6) months after the
date of Executive’s Normal Retirement Date.

          C.      Commencement Date Change. Executive may change the commencement date of the Normal
Retirement Annual Benefit by notifying the Board in writing, subject to the following rules:

               i.      The change to the commencement must be made by giving written notice to the Board of the
change at least twelve (12) months before the date on which the first Normal Retirement Annual
Benefit payment would otherwise be made;

               ii.      All Normal Retirement Annual Benefit payments due must be deferred for a period of at
least five years from the date such payment would have been made in the absence of the change.

     2.      Early Termination Benefit.

          A.      Benefit Amount. Upon Early Termination, the Bank shall pay to the Executive the
Early Termination Lump Sum in lieu of any other benefit under this Agreement.

          B.      Payment Terms. The Bank shall pay the Early Termination Lump Sum to the Executive
in a lump sum within sixty (60) days following Early Termination. Notwithstanding the foregoing,
in the event Executive is a Specified Employee at Early Termination, the Bank shall pay the Early
Termination Lump Sum to the Executive in a lump sum on the date which is six (6) months after the
date of Early Termination.

          C.      Commencement Date Change. Executive may change the commencement date of payment of
the Early Termination Lump Sum by notifying the Board in writing, subject to the following rules:

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               i.      The change to the commencement must be made by giving written notice to the Board of the
change at least twelve (12) months before the date on which the Early Termination Lump Sum payment
would otherwise be made; and

               ii.      Payment of the Early Termination Lump Sum must be deferred for a period of at least five
years from the date such payment would have been made in the absence of the change.

     3.     Disability Benefit.

          A.      Benefit Amount. Upon Termination of Employment due to Disability prior to the
Normal Retirement Age, the Bank shall pay to the Executive the Disability Annual Benefit each year
for a period of ten years in lieu of any other benefit under this Agreement.

          B.      Payment Terms. The Disability Annual Benefit shall be paid each year in twelve
(12) equal monthly installments payable on the first day of each month commencing with the month
following the Executive’s Termination of Employment due to Disability, for a period of ten years.

     4.      Change of Control Benefit.

          A.      Benefit Amount. Upon a Change of Control, the Bank shall pay to the Executive the
Change of Control Annual Benefit each year for a period of ten years in lieu of any other benefit
under this Agreement.

          B.      Payment Terms. The Change of Control Annual Benefit shall be paid each year in
twelve (12) equal monthly installments payable on the first day of each month commencing with the
month following the Executive’s Normal Retirement Age, for a period of ten years.

          C.      Excess Parachute Payment. Notwithstanding any other provision of this Agreement,
the Bank shall not pay any benefit under this Agreement to the extent the benefit would constitute
an “Excess Parachute Payment” as defined in Section 280G(b) of the Code and applicable regulations,
as amended form time to time.

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     5.     Death Benefits

          A.      Death During Active Service. If the Executive dies while in the active service of
the Bank, the Bank shall pay to the Executive Beneficiary the Normal Retirement Annual Benefit for
a period of ten years in lieu of any other benefit under this Agreement.
The Normal Retirement Annual Benefit shall be paid to the Executive Beneficiary in twelve (12)
equal monthly installments payable on the first day of each month commencing with the month
following the Executive’s Death, for a period of ten years.

          B.      Death during Payment of a Lifetime Benefit. If the Executive dies after any
lifetime benefit payments have commenced under this Agreement but before receiving all such
payments, the Bank shall pay all remaining benefits to the Executive Beneficiary at the same time
and in the same amounts they would have been paid to the Executive had the Executive survived.

          C.      Death after Termination of Employment But Before Payment of a Lifetime Benefit
Commences. If the Executive is entitled to a lifetime benefit under this Agreement, but dies
prior to the commencement of payments of such benefit, the Bank shall pay the same benefit to the
Executive Beneficiary that the Executive would have received had she survived. Such benefits shall
commence on the first day of the month following the date of the Executive’s death.

IX.      BENEFICIARIES

     1.      Beneficiary Designations. The Executive shall designate an Executive Beneficiary
by filing a written beneficiary designation with the Bank. The Executive may revoke or modify the
designation at any time by filing a new designation. However, designations will only be effective
if signed by the Executive and received by the Bank during the Executive’s lifetime. The
Executive’s beneficiary designation shall be deemed automatically revoked if the Executive
Beneficiary predeceases the Executive, or if the Executive names a spouse as Executive Beneficiary
and the marriage is subsequently dissolved. If the Executive dies without a valid Executive
Beneficiary, all payments which would have been paid to Executive’s Beneficiary shall be made to
the Executive’s estate.

     2.      Facility of Payment. If a benefit is payable to a minor, to a person declared
incompetent, or to a person incapable of handling the disposition of his or her property, the Bank,
in its discretion, may pay such benefit to the guardian, legal representative or person having the
care or custody of such minor, incapacitated person or incapable person. The Bank may require
proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of
the benefit. Such distribution shall completely discharge the Bank from all liability with respect
to such benefit.

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X.      GENERAL LIMITATIONS

     1.      Termination for Cause. Notwithstanding any provisions of this Agreement to the
contrary, the Bank shall not pay any benefit under this Agreement if the Executive is Terminated
for Cause.

     2.      Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement
if the Executive commits suicide within three (3) years after the date of this Agreement.

In addition, the Bank shall not pay any benefit under this Agreement if the Executive has made any
material misstatement of fact on an employment application or resume provided to the Bank, or on
any application for any benefits provided by the Executive to the Bank.

     3.      Delaying Payments. Bank may delay any payments under his Agreement under the
following circumstances:

          A.      The Bank reasonably anticipates that the Executive’s deduction with respect to such payment
otherwise would be limited or eliminated by application of Code section 162(m), provided that
payment is made either at the earliest date at which the Bank reasonably anticipates that the
deduction of the payment of the amount will not be limited or eliminated by application of Cade
section 162(m) or the calendar year in which the Executive separates from service.

          B.      The Bank reasonably anticipates that the making of the payment will violate a term of a
loan agreement to which the Bank is a party, or other similar contract to which the Bank is a
party, and such violation will cause material harm to the Bank, provided that payment is made at
the earliest date at which the Bank reasonably anticipates that the making of the payment will not
cause such violation, or such violation will not cause material harm to the Bank, and provided that
the Bank entered into the loan agreement for legitimate business reasons, and not for purposes of
deferring the payment.

          C.      The Bank reasonably anticipates that the making of the payment will violate Federal
securities laws or other applicable law, provided that payment is made at the earliest date at
which the Bank reasonably anticipates that the making of the payment will not cause such violation.

XI.     CLAIMS AND REVIEW PROCEDURES

     1.      Claims Procedure. The Bank shall notify any person or entity that makes a claim
under this Agreement (the “Claimant”) in writing, within ninety (90) days of Claimant’s written
application for benefits, of his or her eligibility or non-eligibility for benefits under the
Agreement.

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If the Bank determines that the Claimant is not eligible for benefits or full benefits, the notice
shall set forth (1) the specific reasons for such denial, (2) a specific reference to the
provisions of the Agreement on which the denial is based, (3) a description of any additional
information or material necessary for the Claimant to perfect his or her claim, and a description
of why it is needed, (4) an explanation of this Agreement’s claims review procedure and other
appropriate information as to the steps to be taken if the Claimant wishes to have the claim
reviewed, and (5) a time within which review must be requested. If the Bank determines that there
are special circumstances requiring additional time to make a decision, the Bank shall notify the
Claimant of the special circumstances and the date by which a decision is expected to be made, and
may extend the time for up to an additional ninety (90) days.

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

XII.      GENERAL TERMS

     1.      Purpose. The Plan is intended to constitute an unfunded arrangement maintained by
the Bank primarily for the purpose of providing deferred compensation plan for a select group of
management or highly compensated employees, as described in sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”).

     2.      Amendments and Termination. This Agreement may be amended or terminated only by a
written agreement signed by the Bank and the Executive. Notwithstanding the preceding, the Bank
may amend or terminate this Agreement at any time upon notice to the Executive if, pursuant to
legislative, judicial or regulatory action, continuation of this Agreement without such amendment
would: (1) cause benefits to be taxable to the Executive prior to actual receipt; or (ii) result in
significant financial penalties or other significantly detrimental ramifications to the Bank (other
than the financial impact of paying any provided benefits).

     3.      Binding Effect. This Agreement shall bind the Executive and the Bank, and their
beneficiaries, survivors, executors, successors, administrative and transferees.

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     4.      No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of the Bank, nor does it
limit or restrict the Bank’s right to discharge the Executive. It also does not require the
Executive to remain an employee nor does it limit or restrict the Executive’s right to terminate
employment at any time.

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

     6.      Reorganization. The Bank shall not merge or consolidate into or with another
company, or reorganize, or sell substantially all of its assets to another company, firm, or person
unless such succeeding or continuing company, firm, or person agrees to assume and discharge the
obligations of the Bank under this Agreement or unless any such activity would constitute a Change
of Control. Upon the occurrence of such event, the term “Bank” as used in this Agreement shall be
deemed to refer to the successor or survivor company.

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

     8.      Applicable Law. The Agreement and all rights hereunder shall be governed by the
laws of California, except to the extent preempted by the laws of the United States of America.

     9.      Interpretation of Plan. To the extent not preempted by federal law, the Plan shall
be governed and construed under the laws of the state of California (other than its choice of law
rules) as in effect from time to time. Notwithstanding any provision to the contrary, this Plan
shall be interpreted and construed to comply with Section 409A and the applicable provisions of
ERISA.

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

     11.      Entire Agreement. This Agreement constitutes the entire agreement between the
Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by
virtue of this Agreement other than those specifically set forth herein.

     12.      Administration. The Bank shall have powers which are necessary to administer this
Agreement, including but not limited to:

          A.      Establishing and revising the method of accounting for the Agreement;

          B.      Maintaining a record of benefit payments; and

          C.      Establishing rules and prescribing any forms necessary or desirable to administer the
Agreement.

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     13.      Named Fiduciary. The Bank shall be the named fiduciary and Plan administrator
under this Agreement. It may delegate to others certain aspects of the management and operational
responsibilities including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

     14.      Attorney’s Fees and Costs. If any action at law or in equity, including
arbitration, is necessary to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys’ fees, costs, and expert witness fees, in addition to any
other relief to which that party may be entitled.

IN WITNESS WHEREOF, the Executive and the Bank have signed this Agreement.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	By  	                                            /s/ Patrick J. Moty
 	 
	 	 	PATRICK J. MOTY 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	BANK OF COMMERCE HOLDINGS

 	 
	 	By  	/s/ Harry L. Grashoff, Jr.
 	 
	 	 	HARRY L. GRASHOFF, JR., 	 
	 	 	Chairman 	 
	 

	 	 	 	 	 
	 	 	 
	 	By  	
/s/ David H. Scott
 	 
	 	 	DAVID H. SCOTT, Secretary 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	REDDING BANK OF COMMERCE

 	 
	 	By  	/s/ Harry L. Grashoff, Jr.
 	 
	 	 	HARRY L. GRASHOFF, JR., 	 
	 	 	Chairman 	 
	 

	 	 	 	 	 
	 	 	 
	 	By  	                                            /s/ David H. Scott
 	 
	 	 	DAVID H. SCOTT, Secretary 	 
	 	 	 	 
	 

 

25exv10w17

 

Exhibit 10.17

BANK OF COMMERCE HOLDINGS

SALARY CONTINUATION AGREEMENT

FOR RANDY S. ESLICK

This Salary Continuation Agreement (the “Agreement”) is made effective as of April 1, 2006,
and is entered into by and between Bank Of Commerce Holdings, a California corporation (the
“Bank”), and Randy S. Eslick (the “Executive”), each a “Party” and together the “Parties.”

RECITALS

     E.      The Executive is the Regional President Roseville Division.

     F.      The Bank desires to encourage the Executive to remain the Regional President Roseville
Division of the Bank by providing salary continuation benefits to the Executive from the Bank’s
general assets as set forth in this Agreement.

AGREEMENT

     In consideration of the mutual promises, covenants, and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged
the Parties agree as follows:

XIII.      DEFINITIONS

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

     1.      “Board” means the Board of Directors of the Bank.

     2.      “Change in Control” means (i) a Change in the Ownership of the Relevant Corporation, (ii) a
Change in the Effective Control of the Relevant Corporation, or (iii) or a Change in the Ownership
of a Substantial Portion of the Assets of the Relevant Corporation, as those terms are defined
herein. The events giving rise to the Change in Control must be objectively determinable, and the
Board, in a ministerial capacity, shall certify there is a Change in Control only when the events
giving rise to the Change in Control are objectively determinable. The Board shall not have any
discretionary authority to certify that there has been a Change in Control except as provided in
the preceding sentence. Notwithstanding anything to the contrary, (i) the term “Change in Control”
shall be interpreted in accordance with Section 409A; (ii) any event which constitutes a “Change in
Control” under Section 409A shall constitute a “Change in Control” for purposes of this Agreement;
(iii) and any event which does not constitutes a “Change in Control” under Section 409A shall not
constitute a “Change in Control” for purposes of this Agreement.

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          A.      “Change in the Effective Control of the Relevant Corporation” means either of the
following:

               i.      That one person, or more than one person acting as a group, acquires (or has acquired
during the twelve (12) month period ending on the date of the most recent acquisition by such
person or persons) ownership of stock of the Relevant Corporation possessing thirty-five percent
(35%) or more of the total voting power of the stock of the Relevant Corporation, provided that no
other corporation is a majority shareholder of the Relevant Corporation; or

               ii.     That a majority of the members of the board of directors of the Relevant Corporation are
replaced during any twelve (12) month period by directors whose appointment or election is not
endorsed by a majority of the board members of the Relevant Corporation prior to the date of the
appointment or election, provided that no other corporation is a majority shareholder of the
Relevant Corporation.

          B.      “Change in the Ownership of the Relevant Corporation” means that any one person, or more
than one person acting as a group, acquires ownership of stock of the Relevant Corporation that,
together with stock held by such person or group, constitutes more than fifty percent (50%) of the
total fair market value or total voting power of the stock of the Relevant Corporation. However, if
any one person, or more than one person acting as a group, is considered to own more than fifty
percent (50%) of the total fair market value or total voting power of the stock of the Relevant
Corporation, the acquisition of additional stock by the same person or persons is not considered to
cause a Change in the Ownership of the Relevant Corporation (or to cause a Change in the Effective
Control of the Relevant Corporation as defined herein). An increase in the percentage of stock
owned by any one person, or persons acting as a group, as a result of a transaction in which the
Relevant Corporation acquires its stock in exchange for property will be treated as an acquisition
of stock for purposes of this Agreement. A Change in the Ownership of the Relevant Corporation
only occurs when there is a transfer of stock of the Relevant Corporation (or issuance of stock of
the Relevant Corporation) and stock in the Relevant Corporation remains outstanding after the
transaction.

          C.      “Change in the Ownership of a Substantial Portion of the Assets of the Relevant
Corporation” means that any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve (12) month period ending on the date of the most recent acquisition by
such person or persons) assets from the Relevant Corporation that have a total gross fair market
value equal to or more than forty percent (40%) of the total gross fair market value of all of the
assets of the Relevant Corporation immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of the Relevant Corporation, or the
value of the assets being disposed of, determined without regard to any liabilities associated with
such assets.

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          D.      “Relevant Corporation” means (i) the corporation for whom the Executive is performing
services at the time of the Change in Control event; (ii) the corporation that is liable for the
payment of the deferred compensation under this Plan; or (iii) a corporation that is a majority
shareholder of a corporation identified in sections (i) or (ii) above, or any corporation in a
chain of corporations in which each corporation is a majority shareholder of another corporation in
the chain, ending in a corporation identified in sections (i) or (ii) above. A majority
shareholder is a shareholder owning more than fifty percent (50%) of the total fair market value
and total voting power of such corporation. Stock underlying a vested option is considered owned
by the individual who holds the vested option, and the stock underlying an unvested option is not
considered owned by the individual who holds the unvested option. However, if a vested option is
exercisable for stock that is not substantially vested, the stock underlying the option is not
treated as owned by the individual who holds the option.

     3.      “Change of Control Annual Benefit” means the Change of Control Annual Benefit amount set
forth in Schedule A for the Plan Year ending immediately prior to the date in which a Change of
Control occurs. Notwithstanding the foregoing, if a Change of Control occurs during the first Plan
Year, the Change of Control Annual Benefit shall be the Change of Control Annual Benefit set forth
in Schedule A for Plan Year One.

     4.      “Code” means the Internal Revenue Code of 1986, as amended.

     5.      “Disability” or “Disabled” means: (i) if the Executive is covered by a Bank-sponsored
disability policy, total disability as defined in such policy without regard to any waiting period,
provided the definition of total disability in such policy is consistent with the definition of
“disability” in Section 409A; or (ii) if the Executive is not covered by such a policy, Disability
means the Executive is, in the judgment of a physician who is satisfactory to the Bank, unable to
engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve months. As a condition to receiving any Disability
benefits, the Bank may require the Executive to submit to such physical or mental evaluations and
tests as the Bank’s Board of Directors deems appropriate and reasonable. Notwithstanding anything
to the contrary, the terms “Disability” or “Disabled” shall be interpreted in accordance with
Section 409A.

     6.      “Disability Annual Benefit” means the Disability Annual Benefit amount set forth in
Schedule A for the Plan Year ending immediately prior to the date in which the respective
Termination of Employment occurs. Notwithstanding the foregoing, for Termination of Employment due
to Disability during the first Plan Year, the benefit shall be the Disability Annual Benefit set
forth in Schedule A for Plan Year One.

     7.      “Early Termination” means the Termination of Employment before Normal Retirement Age for
reasons other than death, Disability, Termination for Cause or termination following a Change of
Control.

     8.      “Early Termination Date” means the month, day and year in which Early Termination occurs.

28

 

     9.         “Early Termination Lump Sum” means the amount set forth on Schedule A for the Plan Year
ending immediately prior to the respective Early Termination Date, which benefit is determined by
vesting the Executive in one hundred percent (100%) of the Accrual Balance set forth on Schedule A.

     10.      “Effective Date” means April 1, 2006.

     11.      “Executive Beneficiary” means the beneficiary designated by Executive pursuant to Article
3.

     12.      “Normal Retirement Age” means the Executive’s 61st birthday.

     13.      “Normal Retirement Date” means the later of the Normal Retirement Age or Termination of
Employment.

     14.      “Normal Retirement Annual Benefit” means Thirty Five Thousand Dollars ($35,000.00) per
year.

     15.      “Plan” means this Salary Continuation Agreement.

     16.      “Plan Year” means a twelve (12) month period commencing on April 1 and ending on March 31
of each year. The initial Plan Year shall commence on the Effective Date.

     17.      “Section 409A” means Code Section 409A together with IRS regulations and guidance
promulgated thereunder, as amended from time to time.

     18.      “Specified Employee” means any employee who meets the requirements of a “key employee” set
forth in Code section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations
thereunder and disregarding section 416(i)(5)) at any time during the 12-month period ending on
December 31. If a person is a key employee on any given December 31, the person is treated as a
“Specified Employee” for the 12-month period beginning on April 1 of the next year.

     19.      “Terminated for Cause” or “Termination for Cause” means that Bank terminates the
Executive’s employment for:

          A.      Habitual alcohol abuse or drug addition or abuse;

          B.      Commission of a felony, or acts involving moral turpitude;

          C.      Acts which cause detrimental publicity for the Bank;

          D.      Habitual neglect of duty, willful or gross negligence in carrying out the activities for
which employed, including negligence or neglect in carrying out the directions of the Board, or
willful breach of the obligations of Executive to the Bank, including persistent, malfeasance,
misfeasance or nonfeasance in connection with the performance of Executive’s duties.

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     20.      “Termination of Employment” means that the Executive ceases to be employed by the Bank,
and actually separates from service to the Bank, for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Bank or by Termination for Cause.

XIV.     BENEFITS

     1.      Normal Retirement Benefit.

          A.      Benefit Amount. Upon Termination of Employment on or after the Normal Retirement
Age for reasons other than death, the Bank shall pay to the Executive the Normal Retirement Annual
Benefit for a period of ten years in lieu of any other benefit under this Agreement.

          B.      Payment Terms. The Normal Retirement Annual Benefit shall be paid each year in
twelve (12) equal monthly installments payable on the first day of each month commencing with the
month following the Executive’s Normal Retirement Date, for a period of ten years. Notwithstanding
the foregoing, in the event Executive is a Specified Employee on the Executive’s Normal Retirement
Date, payments made under this section shall commence on the date which is six (6) months after the
date of Executive’s Normal Retirement Date.

          C.      Commencement Date Change. Executive may change the commencement date of the Normal
Retirement Annual Benefit by notifying the Board in writing, subject to the following rules:

               i.      The change to the commencement must be made by giving written notice to the Board of the
change at least twelve (12) months before the date on which the first Normal Retirement Annual
Benefit payment would otherwise be made;

               ii.      All Normal Retirement Annual Benefit payments due must be deferred for a period of at
least five years from the date such payment would have been made in the absence of the change.

     2.      Early Termination Benefit.

          A.      Benefit Amount. Upon Early Termination, the Bank shall pay to the Executive the
Early Termination Lump Sum in lieu of any other benefit under this Agreement.

          B.      Payment Terms. The Bank shall pay the Early Termination Lump Sum to the Executive
in a lump sum within sixty (60) days following Early Termination. Notwithstanding the foregoing,
in the event Executive is a Specified Employee at Early Termination, the Bank shall pay the Early
Termination Lump Sum to the Executive in a lump sum on the date which is six (6) months after the
date of Early Termination.

          C.      Commencement Date Change. Executive may change the commencement date of payment of
the Early Termination Lump Sum by notifying the Board in writing, subject to the following rules:

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               i.      The change to the commencement must be made by giving written notice to the Board of the
change at least twelve (12) months before the date on which the Early Termination Lump Sum payment
would otherwise be made; and

               ii.      Payment of the Early Termination Lump Sum must be deferred for a period of at least five
years from the date such payment would have been made in the absence of the change.

     3.      Disability Benefit.

          A.      Benefit Amount. Upon Termination of Employment due to Disability prior to the
Normal Retirement Age, the Bank shall pay to the Executive the Disability Annual Benefit each year
for a period of ten years in lieu of any other benefit under this Agreement.

          B.      Payment Terms. The Disability Annual Benefit shall be paid each year in twelve
(12) equal monthly installments payable on the first day of each month commencing with the month
following the Executive’s Termination of Employment due to Disability, for a period of ten years.

     4.      Change of Control Benefit.

          A.      Benefit Amount. Upon a Change of Control, the Bank shall pay to the Executive the
Change of Control Annual Benefit each year for a period of ten years in lieu of any other benefit
under this Agreement.

          B.      Payment Terms. The Change of Control Annual Benefit shall be paid each year in
twelve (12) equal monthly installments payable on the first day of each month commencing with the
month following the Executive’s Normal Retirement Age, for a period of ten years.

          C.      Excess Parachute Payment. Notwithstanding any other provision of this Agreement,
the Bank shall not pay any benefit under this Agreement to the extent the benefit would constitute
an “Excess Parachute Payment” as defined in Section 280G(b) of the Code and applicable regulations,
as amended form time to time.

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     5.      Death Benefits

          A.      Death During Active Service. If the Executive dies while in the active service of
the Bank, the Bank shall pay to the Executive Beneficiary the Normal Retirement Annual Benefit for
a period of ten years in lieu of any other benefit under this Agreement.
The Normal Retirement Annual Benefit shall be paid to the Executive Beneficiary in twelve (12)
equal monthly installments payable on the first day of each month commencing with the month
following the Executive’s Death, for a period of ten years.

          B.      Death during Payment of a Lifetime Benefit. If the Executive dies after any
lifetime benefit payments have commenced under this Agreement but before receiving all such
payments, the Bank shall pay all remaining benefits to the Executive Beneficiary at the same time
and in the same amounts they would have been paid to the Executive had the Executive survived.

          C.      Death after Termination of Employment But Before Payment of a Lifetime Benefit
Commences. If the Executive is entitled to a lifetime benefit under this Agreement, but dies
prior to the commencement of payments of such benefit, the Bank shall pay the same benefit to the
Executive Beneficiary that the Executive would have received had she survived. Such benefits shall
commence on the first day of the month following the date of the Executive’s death.

XV.     BENEFICIARIES

     1.      Beneficiary Designations. The Executive shall designate an Executive Beneficiary
by filing a written beneficiary designation with the Bank. The Executive may revoke or modify the
designation at any time by filing a new designation. However, designations will only be effective
if signed by the Executive and received by the Bank during the Executive’s lifetime. The
Executive’s beneficiary designation shall be deemed automatically revoked if the Executive
Beneficiary predeceases the Executive, or if the Executive names a spouse as Executive Beneficiary
and the marriage is subsequently dissolved. If the Executive dies without a valid Executive
Beneficiary, all payments which would have been paid to Executive’s Beneficiary shall be made to
the Executive’s estate.

     2.      Facility of Payment. If a benefit is payable to a minor, to a person declared
incompetent, or to a person incapable of handling the disposition of his or her property, the Bank,
in its discretion, may pay such benefit to the guardian, legal representative or person having the
care or custody of such minor, incapacitated person or incapable person. The Bank may require
proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of
the benefit. Such distribution shall completely discharge the Bank from all liability with respect
to such benefit.

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XVI.     GENERAL LIMITATIONS

     1.      Termination for Cause. Notwithstanding any provisions of this Agreement to the
contrary, the Bank shall not pay any benefit under this Agreement if the Executive is Terminated
for Cause.

     2.      Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement
if the Executive commits suicide within three (3) years after the date of this Agreement.

In addition, the Bank shall not pay any benefit under this Agreement if the Executive has made any
material misstatement of fact on an employment application or resume provided to the Bank, or on
any application for any benefits provided by the Executive to the Bank.

     3.      Delaying Payments. Bank may delay any payments under his Agreement under the
following circumstances:

          A.      The Bank reasonably anticipates that the Executive’s deduction with respect to such payment
otherwise would be limited or eliminated by application of Code section 162(m), provided that
payment is made either at the earliest date at which the Bank reasonably anticipates that the
deduction of the payment of the amount will not be limited or eliminated by application of Cade
section 162(m) or the calendar year in which the Executive separates from service.

          B.      The Bank reasonably anticipates that the making of the payment will violate a term of a
loan agreement to which the Bank is a party, or other similar contract to which the Bank is a
party, and such violation will cause material harm to the Bank, provided that payment is made at
the earliest date at which the Bank reasonably anticipates that the making of the payment will not
cause such violation, or such violation will not cause material harm to the Bank, and provided that
the Bank entered into the loan agreement for legitimate business reasons, and not for purposes of
deferring the payment.

          C.      The Bank reasonably anticipates that the making of the payment will violate Federal
securities laws or other applicable law, provided that payment is made at the earliest date at
which the Bank reasonably anticipates that the making of the payment will not cause such violation.

XVII.     CLAIMS AND REVIEW PROCEDURES

     1.     Claims Procedure. The Bank shall notify any person or entity that makes a claim
under this Agreement (the “Claimant”) in writing, within ninety (90) days of Claimant’s written
application for benefits, of his or her eligibility or non-eligibility for benefits under the
Agreement.

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If the Bank determines that the Claimant is not eligible for benefits or full benefits, the notice
shall set forth (1) the specific reasons for such denial, (2) a specific reference to the
provisions of the Agreement on which the denial is based, (3) a description of any additional
information or material necessary for the Claimant to perfect his or her claim, and a description
of why it is needed, (4) an explanation of this Agreement’s claims review procedure and other
appropriate information as to the steps to be taken if the Claimant wishes to have the claim
reviewed, and (5) a time within which review must be requested. If the Bank determines that there
are special circumstances requiring additional time to make a decision, the Bank shall notify the
Claimant of the special circumstances and the date by which a decision is expected to be made, and
may extend the time for up to an additional ninety (90) days.

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

XVIII.     GENERAL TERMS

     1.      Purpose. The Plan is intended to constitute an unfunded arrangement maintained by
the Bank primarily for the purpose of providing deferred compensation plan for a select group of
management or highly compensated employees, as described in sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”).

     2.      Amendments and Termination. This Agreement may be amended or terminated only by a
written agreement signed by the Bank and the Executive. Notwithstanding the preceding, the Bank
may amend or terminate this Agreement at any time upon notice to the Executive if, pursuant to
legislative, judicial or regulatory action, continuation of this Agreement without such amendment
would: (1) cause benefits to be taxable to the Executive prior to actual receipt; or (ii) result in
significant financial penalties or other significantly detrimental ramifications to the Bank (other
than the financial impact of paying any provided benefits).

     3.      Binding Effect. This Agreement shall bind the Executive and the Bank, and their
beneficiaries, survivors, executors, successors, administrative and transferees.

34

 

     4.     No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of the Bank, nor does it
limit or restrict the Bank’s right to discharge the Executive. It also does not require the
Executive to remain an employee nor does it limit or restrict the Executive’s right to terminate
employment at any time.

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

     6.      Reorganization. The Bank shall not merge or consolidate into or with another
company, or reorganize, or sell substantially all of its assets to another company, firm, or person
unless such succeeding or continuing company, firm, or person agrees to assume and discharge the
obligations of the Bank under this Agreement or unless any such activity would constitute a Change
of Control. Upon the occurrence of such event, the term “Bank” as used in this Agreement shall be
deemed to refer to the successor or survivor company.

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

     8.      Applicable Law. The Agreement and all rights hereunder shall be governed by the
laws of California, except to the extent preempted by the laws of the United States of America.

     9.      Interpretation of Plan. To the extent not preempted by federal law, the Plan shall
be governed and construed under the laws of the state of California (other than its choice of law
rules) as in effect from time to time. Notwithstanding any provision to the contrary, this Plan
shall be interpreted and construed to comply with Section 409A and the applicable provisions of
ERISA.

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

     11.      Entire Agreement. This Agreement constitutes the entire agreement between the
Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by
virtue of this Agreement other than those specifically set forth herein.

     12.      Administration. The Bank shall have powers which are necessary to administer this
Agreement, including but not limited to:

          A.      Establishing and revising the method of accounting for the Agreement;

          B.      Maintaining a record of benefit payments; and

          C.      Establishing rules and prescribing any forms necessary or desirable to administer the
Agreement.

35

 

     13.      Named Fiduciary. The Bank shall be the named fiduciary and Plan administrator
under this Agreement. It may delegate to others certain aspects of the management and operational
responsibilities including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

     14.      Attorney’s Fees and Costs. If any action at law or in equity, including
arbitration, is necessary to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys’ fees, costs, and expert witness fees, in addition to any
other relief to which that party may be entitled.

IN WITNESS WHEREOF, the Executive and the Bank have signed this Agreement.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	By  	                                            /s/ Randy S. Eslick
 	 
	 	 	RANDY S. ESLICK 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	BANK OF COMMERCE HOLDINGS

 	 
	 	By  	/s/ Harry L. Grashoff, Jr.
 	 
	 	 	HARRY L. GRASHOFF, JR., 	 
	 	 	Chairman 	 
	 

	 	 	 	 	 
	 	 	 
	 	By  	
/s/ David H. Scott
 	 
	 	 	DAVID H. SCOTT, Secretary 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	REDDING BANK OF COMMERCE

 	 
	 	By  	/s/ Harry L. Grashoff, Jr.
 	 
	 	 	HARRY L. GRASHOFF, JR., 	 
	 	 	Chairman 	 
	 

	 	 	 	 	 
	 	 	 
	 	By  	                                            /s/ David H. Scott
 	 
	 	 	DAVID H. SCOTT, Secretary 	 
	 	 	 	 
	 

 

36

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