Document:

Exhibit 10.4

 

AMENDMENT NO. 1

 

TO

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amendment No. 1 to the Amended and
Restated Employment Agreement by and between HERITAGE COMMERCE CORP, a
California bank holding company (the “Company”),
HERITAGE BANK OF COMMERCE, a California banking corporation (the “Bank”), and MICHAEL R. ONG, an individual (the “Executive”) dated August 12, 2008 (the “Agreement”), is entered into on December 29, 2008 for
the purposes stated hereinafter.

 

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

 

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

 

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

 

WHEREAS, the Company, Bank and Executive
believe it to be in their respective best interests to amend the Agreement as
set forth hereinafter to reflect compliance with the Emergency Economic
Stabilization Act of 2008 (the “EESA”) and/or the Troubled Asset Relief Program
established by the EESA as long as it applies to the Company, Bank and
Executive.

 

NOW, THEREFORE, the Company, Bank and
Executive agree to add as the final paragraph of the Agreement the following:

 

14.17                     Parachute Payment Cutback.  As long as the U.S. Treasury owns any stock
or assets of the Bank or the Company pursuant to the Emergency Economic
Stabilization Act of 2008 (the “EESA”) and/or the Troubled Asset Relief Program
established by the EESA, in the event that any payment or benefit received or
to be received by Executive pursuant to the terms of this Agreement or
otherwise in connection with the Executive’s termination of employment or contingent
upon a change in ownership or control pursuant to any plan or arrangement or
other agreement with the Bank or the Company (or any affiliate) would
constitute a “parachute payment” within the meaning of Section 2800(b)(2) of
the Internal Revenue Code of 1986, as amended, including application of Section 2800(e) as
added by the EESA and any other applicable restrictions under the EESA for the
Bank and the Company to comply with the Troubled Asset Relief Program
established by the EESA, then the payments and benefits received or to be
received by the Executive shall be reduced by the minimum extent necessary so
that such payments and benefits do not constitute “parachute payments”.  This paragraph 14.17 shall no 

 

 

longer be in
effect after such time as the United States Treasury does not own any equity or
debt interest in the Company.

 

IN WITNESS WHEREOF, the Executive and the
Employer have executed this Amendment No. 1 to the Agreement, effective as
of the date first above written.

 

	
   

  	
  “COMPANY”
  

  
	
   

  	
   

  
	
   

  	
  HERITAGE
  COMMERCE CORP, 

  
	
   

  	
  a California
  bank holding company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Walter Kaczmarek

  
	
   

  	
  Walter Kaczmarek,

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “BANK”
   

  
	
   

  	
   

  
	
   

  	
  HERITAGE
  BANK OF COMMERCE,

  
	
   

  	
  a California
  banking company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Walter Kaczmarek

  
	
   

  	
  Walter Kaczmarek,

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “EXECUTIVE”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Michael R. Ong

  
	
   

  	
  Michael R. OngExhibit 10.5

 

AMENDMENT NO. 1

 

TO

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amendment No. 1 to the Amended and
Restated Employment Agreement by and between HERITAGE COMMERCE CORP, a
California bank holding company (the “Company”),
HERITAGE BANK OF COMMERCE, a California banking corporation (the “Bank”), and JAMES MAYER, an individual (the “Executive”) dated February 8, 2007 (the “Agreement”), is entered into on December 29, 2008 for
the purposes stated hereinafter.

 

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

 

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

 

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

 

WHEREAS, the Company, Bank and Executive
believe it to be in their respective best interests to amend the Agreement as
set forth hereinafter to reflect compliance with the Emergency Economic
Stabilization Act of 2008 (the “EESA”) and/or the Troubled Asset Relief Program
established by the EESA as long as it applies to the Company, Bank and
Executive.

 

NOW, THEREFORE, the Company, Bank and
Executive agree to add as the final paragraph of the Agreement the following:

 

14.17                     Parachute Payment Cutback.  As long as the U.S. Treasury owns any stock
or assets of the Bank or the Company pursuant to the Emergency Economic
Stabilization Act of 2008 (the “EESA”) and/or the Troubled Asset Relief Program
established by the EESA, in the event that any payment or benefit received or
to be received by Executive pursuant to the terms of this Agreement or
otherwise in connection with the Executive’s termination of employment or
contingent upon a change in ownership or control pursuant to any plan or
arrangement or other agreement with the Bank or the Company (or any affiliate)
would constitute a “parachute payment” within the meaning of Section 2800(b)(2) of
the Internal Revenue Code of 1986, as amended, including application of Section 280G(e) as
added by the EESA and any other applicable restrictions under the EESA for the
Bank and the Company to comply with the Troubled Asset Relief Program
established by the EESA, then the payments and benefits received or to be
received by the Executive shall be reduced by the minimum extent necessary so
that such payments and benefits do not constitute “parachute payments”.  This paragraph 14.17 shall no 

 

 

longer be in
effect after such time as the United States Treasury does not own any equity or
debt interest in the Company.

 

IN WITNESS WHEREOF, the Executive and the
Employer have executed this Amendment No. 1 to the Agreement, effective as
of the date first above written.

 

	
   

  	
  “COMPANY”
  

  
	
   

  	
   

  
	
   

  	
  HERITAGE
  COMMERCE CORP, 

  
	
   

  	
  a California
  bank holding company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Walter Kaczmarek

  
	
   

  	
  Walter Kaczmarek, 

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “BANK”
  

  
	
   

  	
   

  
	
   

  	
  HERITAGE
  BANK OF COMMERCE, 

  
	
   

  	
  a California
  banking company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Walter Kaczmarek

  
	
   

  	
  Walter Kaczmarek, 

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “EXECUTIVE”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ James Mayer

  
	
   

  	
  James MayerExhibit 10.6

 

FIRST
AMENDED AND RESTATED

HERITAGE COMMERCE CORP

DEFERRED FEE AGREEMENT

 

RECITAL

 

This First
Amended and Restated Deferred Fee Agreement (hereinafter “Agreement”) is made
and entered into effective as of January 1, 2005, by and between HERITAGE COMMERCE CORP, a bank holding company organized and
existing under the laws of the state of California (hereinafter the “Company”)
and JACK PECKHAM, a Director of the Company
(hereinafter “Director” or “Participant”);

 

WHEREAS, it is
the parties’ intent to comply with the final regulations under Internal Revenue
Code Section 409A, issued on April 10, 2007 by the Internal Revenue
Service (“IRS”) and the Treasury Department;

 

WHEREFORE, the
Company and Director hereby agree to amend and restate the original of Commerce
Deferred Fee Agreement, effective as of June 30, 1997, as amended,
(hereinafter “Original Agreement”), and further agree that this Agreement shall
amend, supersede and replace the Original Agreement in its entirety;

 

WHEREAS, to
encourage the Director to remain a member of the Company’s Board of Directors,
the Company is willing to continue to provide the Director with a deferred fee
opportunity;

 

WHEREAS, it is
the intent of the parties hereto that this Agreement be considered an unfunded
arrangement maintained primarily to provide supplemental retirement benefits
for the Director; and

 

NOW,
THEREFORE, in consideration of the past service and the services to be
performed by the Director in the future, as well as the mutual promises and
covenants contained herein, the Director and the Company agree as follows:

 

A G R E E M E N T

 

1.             Terms and
Definitions.

 

For the purposes of this Agreement, the following
terms shall have the meanings indicated, unless the context clearly indicates
otherwise:

 

1.1          Administrator.  The Compensation and Benefits Committee of
the Board of Directors of Heritage Commerce Corp shall be the “Administrator”
and, solely for the purposes of ERISA (as defined below), the “fiduciary” of
this Agreement to the extent a fiduciary is required by ERISA.

 

1.2          Beneficiary.  The term “Beneficiary(ies)” shall refer to
the person, persons or entity designated in writing by the Director on forms
provided by the Administrator 

 

1

 

(“Beneficiary Designation
Form”) to receive the benefits payable under this Agreement in the event of
Director’s death. A Director may change his Beneficiary from time to time, so
long as permissible, by filing a new written Beneficiary Designation Form with
the Administrator, and such designation shall be effective upon receipt by the
Administrator.  If Director has not
validly designated a beneficiary, or if a designated Beneficiary predeceases
the Director, then any benefit owed a beneficiary pursuant to this Agreement
shall be made to Director’s estate.

 

1.3          Board of Directors.  The “Board of Directors” or “Board” shall
mean the Board of Directors of Heritage Commerce Corp.

 

1.4          Code.  The “Code” shall mean the Internal Revenue
Code of 1986, as amended.

 

1.5          Company.  For the purpose of this Agreement, the term “Company”
shall include both Heritage Bank of Commerce and Heritage Commerce Corp, when
possible and not prohibited by alternate provisions of this Agreement.

 

1.6          Deferral Amount.  The term “Deferral Amount” shall mean 100% of
Participant’s Director’s Fees.

 

1.7          Deferred Compensation
Account.  The term “Deferred
Compensation Account” shall reflect the amounts Participant has elected to
defer over time. The Deferred Compensation Account shall be a bookkeeping entry
only and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to, or in respect of, a Participant
pursuant to this Agreement.  The Deferred
Compensation Account shall be equal to the sum of (i) all amounts deferred
under this Agreement, including all amounts deferred previously under the
Original Agreement and (ii) interest thereon credited in accordance with
the applicable interest crediting provisions of this Agreement, net of all
distributions from such account. Amounts deferred pursuant to the Original
Agreement and this Agreement shall be credited to the Deferred Compensation
Account, along with the specified interest thereon.

 

1.8          Director Benefit.  The term “Director Benefit” shall mean the benefit
determined pursuant to this Agreement, forfeited, reduced or adjusted to the
extent:  (a)  required by reason of
the lawful order of any regulatory agency or body having jurisdiction over the
Company; or (b) required in order for the Company to comply with any and
all applicable state and federal laws, including, but not limited to, income,
employment and disability income tax laws (eg., FICA, FUTA, SDI).

 

1.9          Director’s Fees.  The term “Director’s Fees” shall mean the annual
cash compensation paid by the Company to Director for services rendered during
a given Plan Year, including annual retainer fees, chair retainer fees, meeting
fees, committee fees, and special meeting fees (if applicable).

 

1.10        Distribution Election
Form.  The term “Distribution Election
Form” shall refer to the form established by the Company that a Participant
completes, signs and returns to the Administrator to make an election regarding
the form and/or timing of a distribution under this Agreement. Any changes to
the Distribution Election Form must be made in compliance with the
restrictions and limitations imposed by IRC 409A.

 

2

 

1.11        Effective Date.  The term “Effective Date” shall mean the date
first written above.

 

1.12        ERISA.  The term “ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended.

 

1.13        IRC 409A.  The term “IRC 409A” shall refer to Code
section 409A, the final regulations issued by the IRS and the Treasury
Department under Code section 409A, and all related guidance and notices
thereon.

 

1.14        Plan.  The “Plan” shall mean this Agreement, any
Beneficiary Designation Form, and any Distribution Election Form.

 

1.15        Plan Year.  The term “Plan Year” shall mean the calendar
year (January 1 through December 31 of any given year).

 

1.16        Rate of Interest.  The Rate of Interest shall refer to the
percentage used to calculate earnings on the deferred amounts in the Deferred
Compensation Account.  The earnings shall
be accrued and credited annually to the Deferred Compensation Account. Prior to
December 31, 2004, the Rate of Interest shall be eight percent (8%), the
rate designated in the Original Agreement. Thereafter, the Rate of Interest
shall be determined, in accordance with IRC 409A, and it shall be a reasonable
rate of interest.  The
Rate of Interest for the years after December 31, 2004 and prior to January 1,
2009 shall be eight percent (8%). 
Following December 31, 2008, the Rate of Interest shall be the Wall
Street Journal prime rate of interest on December 31 of each year (or if
there is no such rate a comparable rate set annually by the Board of Directors
on or before December 31st of each year) and shall remain in effect for
the following calendar year.

 

1.17        Separation from Service.  The term “Separation from Service” shall be
read and interpreted consistent with IRC 409A and any future notices or
guidance related thereto.  The term “Separation
from Service” shall mean the expiration of all contracts or terms of service
under which the Director is performing services as a member of the Board of
Directors, and where expiration constitutes a good faith and complete
termination of the service relationship.

 

2.             Scope, Purpose And
Effect.

 

2.1          Not an Independent
Contractor or Other Agreement.  Although
this Agreement is intended to provide the Director with an additional incentive
to remain an active member of the Board of Directors of the Company, this
Agreement shall not be deemed to constitute an independent contractor or other
agreement between the Director and the Company nor shall any provision of this
Agreement restrict or expand the right of the shareholders of the Company or
the Board to remove Director for any reason. 
This Agreement shall have no impact or effect upon any separate written
agreement which the Director may have with the Company, it being the parties’
intention and agreement that unless this Agreement is specifically referenced
in said agreement (or any modification thereto), this Agreement (and the
Company’s obligations hereunder) shall stand separate and apart and shall have
no effect on or be affected by, the terms and provisions of said agreement.

 

3

 

3.             Compliance With
IRC 409A.

 

3.1          Compliance With IRC
409A.  In the event of any
ambiguity in terms, or in the event further clarification of any term or
provision is necessary, all interpretations and payouts of benefits based
thereon shall be in accordance with IRC 409A.

 

3.2          Changes In Time Or Form Of
Payment.  Participant may modify
the time or form of benefit payment if the following requirements are satisfied
(i) the election may not take effect until at least twelve (12) months
after the date on which the election is made (i.e. if a distribution event
occurs in the interim, the original distribution method must be followed); (ii) other
than payments relating to death, any election to delay a distribution must
delay the distribution at least five (5) years from the date such payment
would otherwise have been made (or in the case of a life annuity or installment
payments treated as a single payment, five years from the date the first amount
was scheduled to be paid); and (iii) any payment made pursuant to a fixed
time or scheduled series of distributions must be made at least twelve (12)
months in advance of the first such scheduled payment.

 

4.             Deferred
Compensation Account.

 

4.1          Credits To Deferred
Compensation Account.  The
Company shall establish the Deferred Compensation Account.  This Deferred Compensation Account shall be
credited on the dates Director’s Fees would otherwise have been paid.

 

4.2          Interest On The
Deferred Compensation Account. 
The Deferred Compensation Account shall be credited annually with an
amount equal to the Rate of Interest earned. 
Interest earned shall be calculated by multiplying the balance of the
Deferred Compensation Account by the specified Rate of Interest. Such amount
shall be credited on December thirty-first (31st) of each year until such
time as the benefits under this Agreement have been paid in full.

 

4.3          Nature Of The
Deferred Compensation Account. 
The Deferred Compensation Account shall be utilized solely as a device
for the measurement and determination of the amount of deferred compensation to
be paid to the Participant at the times hereinafter specified, and the Company
shall not segregate any of its assets in order to satisfy any obligations under
this Agreement.  The Deferred
Compensation Account shall not constitute or be treated as a trust fund of any
kind.  On the contrary, it is understood
that all amounts credited to the Deferred Compensation Account shall be for the
sole purpose of bookkeeping and remain the sole property of the Company, and
that the Participant shall have no ownership rights of any nature with respect
thereto.  The Participant’s rights are
limited to the rights to receive payments as hereinafter provided and the
Participant’s position with respect thereto is that of a general unsecured
creditor of the Company.

 

4

 

5.             Payment of
Deferred Compensation Account.

 

Payment of the Deferred
Compensation Account shall be in accordance with the following:

 

5.1          Payment of Benefit in
the Event Participant Separates from Service.  In the event of Participant’s Separation from
Service for any reason, including his death, the Participant (or his
Beneficiary in the case of his death), shall receive the balance in his
Deferred Compensation Account as of the date of his Separation from Service.
The Deferred Compensation Account Balance shall be paid to the Participant (or
his Beneficiary in the case of his death) in accordance with the Distribution
Election Form attached hereto.

 

6.             Witholdings.

 

6.1          Withholding.  The Company shall withhold from payments made
hereunder any taxes required to be withheld under federal, state or local law.

 

6.2          Effect of Payment.  Payment of the forgoing benefits shall fully
and completely discharge the Company from all further obligations under this
Agreement with respect to a Participant and the Participant’s Beneficiary(ies).

 

7.             Beneficiary
Designations.

 

7.1          Beneficiary
Designation.  Each Participant
shall have the right, at any time, to designate any person or persons as his
Beneficiary(ies) to whom benefits under this Agreement shall be paid in the
event of his death prior to complete distribution to the Director of the
benefits due under the Agreement.  Each
Beneficiary designation shall be in a written form prescribed by the
Administrator, and will be effective only when filed with the Administrator
during the Participant’s lifetime and when accepted and acknowledged in writing
by the Administrator or its designated agent.

 

7.2          Amendments to
Beneficiary Designation.  Any
Beneficiary designation may be changed by Director without the consent of any
designated Beneficiary by the filing of a new Beneficiary designation with the
Administrator.  The filing of a new
Beneficiary designation form will cancel all Beneficiary designations
previously filed.  If a Director’s
compensation is community property, any Beneficiary designation shall be valid
or effective only as permitted under applicable law.

 

7.3          No Participant
Designation.  In the absence of
an effective Beneficiary designation, or if all designated Beneficiaries
predecease the Director or die prior to complete distribution of the Director’s
benefits, then the Director’s designated Beneficiary shall be deemed to be the
Director’s estate.

 

7.4          Doubt as to
Beneficiary.  If the
Administrator has any doubt as to the proper Beneficiary to receive payments
pursuant to this Agreement, the Administrator shall have the right to withhold
such payments until this matter is resolved (so long as such payments are made
in a timely fashion and in compliance with IRC 409A).

 

5

 

7.5          Payment to Guardian.  If a benefit is payable to a minor or a
person declared incompetent or to a person incapable of handling the
disposition of his property, the Administrator may direct payment of such
benefit to the guardian, legal representative or such person having the care
and custody of such minor, incompetent or person.  The Administrator may require proof of
incompetency, minority, incapacity or guardianship as it may deem appropriate
prior to distribution of the benefit. 
Such distribution shall completely discharge the Administrator and the
Company from all liability with respect to such benefit.

 

7.6          Effect of Payment to
the Beneficiary.  Payment to the
deemed Beneficiary shall fully and completely discharge the Company and the Administrator
from all further obligations under this Agreement.

 

8.             Administration And
Claims.

 

8.1          Named Fiduciary and
Plan Administrator.  The “Named
Fiduciary” and “Plan Administrator” of this Plan shall be the Compensation and
Benefits Committee of the Board of Directors. 
As Named Fiduciary and Plan Administrator, the Compensation Committee
shall be responsible for the management, control and administration of this
Plan.  The Named Fiduciary may delegate
to others certain aspects of the management and operation responsibilities of
the Plan, including employment of advisors and the delegation of ministerial
duties to qualified individuals.

 

8.2          Claim.  The Administrator shall, but only to the
extent necessary to comply with ERISA, be designated as the named fiduciary
under this Agreement and shall have authority to control and manage the
operation and administration of this Agreement. 
Consistent therewith, the Company shall make all determinations as to
the rights to benefits under this Agreement. 
Any decision by the Administrator denying a claim by the Participant,
the Participant’s spouse, or the Participant’s Beneficiary for benefits under
this Agreement shall be stated in writing and delivered or mailed, via
registered or certified mail, to the Participant, the Participant’s spouse or
the Participant’s Beneficiary, as the case may be.  Such decision shall set forth the specific
reasons for the denial of a claim.  In
addition, the Company shall provide the Participant, the Participant’s spouse
or the Participant’s Beneficiary with a reasonable opportunity for a full and
fair review of the decision denying such claim.

 

8.3          Arbitration of
Disputes.  All unresolved claims,
disputes and other matters in question arising out of or relating to this
Agreement or the breach or interpretation thereof, other than those matters
which are to be determined by the Administrator in its sole and absolute
discretion, shall be resolved by binding arbitration before a representative
member, selected by the mutual agreement of the parties, of the Judicial
Arbitration and Mediation Services, Inc. (“JAMS”), located in San Jose,
California.  In the event JAMS is unable
or unwilling to conduct the arbitration provided for under the terms of this
Paragraph, or has discontinued its business, the parties agree that a
representative member, selected by the mutual agreement of the parties, of the
American Arbitration Association (“AAA”), located in San Jose, California,
shall conduct the binding arbitration referred to in this Paragraph.  Notice of the demand for arbitration shall be
filed in writing with the other party and with JAMS (or AAA, if
necessary).  In no event shall the demand
for arbitration be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would 

 

6

 

be barred by the
applicable statute of limitations.  The
arbitration shall be subject to such rules of procedure used or
established by JAMS, or if there are none, the rules of procedure used or
established by AAA.  Any award rendered
by JAMS or AAA shall be final and binding upon the parties, and as applicable,
their respective heirs, beneficiaries, legal representatives, agents, successors
and assigns, and may be entered in any court having jurisdiction thereof.  The obligation of the parties to arbitrate
pursuant to this clause shall be specifically enforceable in accordance with,
and shall be conducted consistently with, the provisions of Title 9 of Part 3
of the California Code of Civil Procedure. 
Any arbitration hereunder shall be conducted in San Jose, California,
unless otherwise agreed to by the parties.

 

9.             Dispute Resolution.

 

9.1          Attorneys’ Fees.  In the event of any arbitration or litigation
concerning any controversy, claim or dispute between the parties hereto,
arising out of or relating to this Agreement or the breach hereof, or the
interpretation hereof, (a) each party shall pay his own attorneys’
arbitration fees incurred (pursuant to the terms of this Agreement); (b) the
prevailing party shall be entitled to recover from the other party reasonable
expenses, attorneys’ fees and costs incurred in the enforcement or collection
of any judgment or award rendered. The “prevailing party” means any party (one
party or both parties, as the case may be) determined by the arbitrator(s) or
court to be entitled to money payments from the other, not necessarily the
party in whose favor a judgment is rendered.

 

10.          Status as an
Unsecured General Creditor.

 

10.1        Unsecured Creditor.  Notwithstanding anything contained herein to
the contrary:  (i) the Director
shall have no legal or equitable rights, interests or claims in or to any
specific property or assets of the Company as a result of this Agreement; (ii) none
of the Company’s assets shall be held in or under any trust for the benefit of
the Director or held in any way as security for the fulfillment of the
obligations of the Company under this Agreement; (iii) all of the Company’s
assets shall be and remain the general unpledged and unrestricted assets of the
Company; (iv) the Company’s obligation under this Agreement shall be that
of an unfunded and unsecured promise by the Company to pay money in the future;
and (v) the Director shall be an unsecured general creditor with respect
to any benefits which may be payable under the terms of this Agreement.

 

Assets set aside in trust by the Company to meet its
obligations under this Agreement shall not be placed in a foreign trust located
outside the United States.

 

10.2        Corporate Assets.  Payments to Director or his Beneficiary(ies)
shall be made from assets which shall continue, for all purposes, to be a part
of the general, unrestricted assets of the Company. No person shall have nor
acquire any interest in any such assets by virtue of the provisions of this
Agreement.

 

The Company may, in its sole discretion, purchase
assets to secure all or any part of its obligations undertaken through this
Agreement. If the Company elects to secure its promise under this Agreement, in
whole or in part, through the purchase of life insurance, mutual funds,
disability policies, annuities or other assets, then Company may, at any time
dispose of such 

 

7

 

assets in whole or in
part. In no event shall Director or Beneficiary(ies) be deemed to have a lien,
right, title, or interest in any specific investment or asset of Company.

 

If Company decided to purchase a life insurance,
disability or annuity policy upon the life or health of the Director, then
Director will cooperate by furnishing any and all information requested by the
Company and by taking such physical examinations or other action as may be
requested by the Company in order to obtain such insurance or annuity.

 

11.          Miscellaneous.

 

11.1        Opportunity To Consult
With Independent Advisors.  The
Director acknowledges that he has been afforded the opportunity to consult with
independent advisors of his choosing including, without limitation, accountants
or tax advisors and counsel regarding both the benefits granted to him under
the terms of this Agreement and the (i) terms and conditions which may
affect the Director’s right to these benefits and (ii) personal tax
effects of such benefits including, without limitation, the effects of any
federal or state taxes, Section 280G of the Code, and any other taxes,
costs, expenses or liabilities whatsoever related to such benefits, which in
any of the foregoing instances the Director acknowledges and agrees shall be
the sole responsibility of the Director notwithstanding any other term or
provision of this Agreement.  The
Director further acknowledges and agrees that the Company shall have no
liability whatsoever related to any such personal tax effects or other personal
costs, expenses, or liabilities applicable to the Director and further
specifically waives any right for himself or herself, and his or her heirs,
beneficiaries, legal representatives, agents, successor and assign to claim or
assert liability on the part of the Company related to the matters described
above in this paragraph.   The Director
further acknowledges that he has read, understands and consents to all of the
terms and conditions of this Agreement, and that he enters into this Agreement
with a full understanding of its terms and conditions.

 

11.2        Notice.  Any notice required or permitted of either
the Director or the Company under this Agreement shall be deemed to have been
duly given, if by personal delivery, upon the date received by the party or its
authorized representative; if by facsimile, upon transmission to a telephone
number previously provided by the party to whom the facsimile is transmitted as
reflected in the records of the party transmitting the facsimile and upon
reasonable confirmation of such transmission; and if by mail, on the third day
after mailing via U.S. first class mail, registered or certified, postage
prepaid and return receipt requested, and addressed to the party at the address
given below for the receipt of notices, or such changed address as may be
requested in writing by a party.

 

	
  If to the
  Company:

  	
   

  	
  Heritage Commerce Corp

  
	
   

  	
   

  	
  150 Almaden Blvd.

  
	
   

  	
   

  	
  San Jose, CA 95113

  
	
   

  	
   

  	
  Attn.:  Lawrence D. McGovern

  
	
   

  	
   

  	
  Executive Vice President/Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
  If to the
  Director: 

  	
   

  	
  Jack Peckham

  
	
   

  	
   

  	
  6683 Crystal Springs Drive

  
	
   

  	
   

  	
  San Jose, CA 95120

  

 

8

 

11.3        Assignment.  The Director shall have no power or right to
transfer, assign, anticipate, hypothecate, modify or otherwise encumber any
part or all of the amounts payable hereunder, nor, prior to payment in
accordance with the terms of this Agreement, shall any portion of such amounts
be:  (i) subject to seizure by any
creditor of the Director, by a proceeding at law or in equity, for the payment
of any debts, judgments, alimony or separate maintenance obligations which may
be owed by the Director; or (ii) transferable by operation of law in the
event of bankruptcy, insolvency or otherwise. Any such attempted assignment or
transfer shall be void. In the event the Director or any beneficiary attempts
assignment, communication, hypothecation, transfer or disposal of the benefits
hereunder, any such attempted transfer or assignment shall be void.

 

11.4        IRC Section 280G
Issues.  If all or any portion of
the amounts payable to the Director under this Agreement, either alone or
together with other payments which the Director has the right to receive from
the Company, constitute “excess parachute payments” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), that are subject
to the excise tax imposed by Section 4999 of the Code (or similar tax
and/or assessment), Director shall be responsible for the payment of such
excise tax and Company (and its successor) shall be responsible for any loss of
deductibility related thereto; provided, however, that Company and Director shall
cooperate with each other and use all reasonable efforts to minimize to the
fullest extent possible the amount of excise tax imposed by Section 4999
of the Code, as long as such efforts are in accordance with IRC 409A.  If, at a later date, it is determined
(pursuant to final regulations or published rulings of the Internal Revenue
Service, final judgment of a court of competent jurisdiction, or otherwise)
that the amount of excise taxes payable by the Director is greater than the
amount initially so determined, then the Director shall pay an amount equal to
the sum of such additional excise taxes and any interest, fines and penalties
resulting from such underpayment.  The
determination of the amount of any such excise taxes shall be made by the
independent accounting firm employed by the Company immediately prior to the
change in control or such other independent accounting firm or advisor as may
be mutually agreeable to Company and Director in the exercise of their
reasonable good faith judgment.

 

11.5        Binding Effect/Merger
or Reorganization.  This
Agreement shall be binding upon and inure to the benefit of the Director and
the Company.  The term “Company” as used
in this Agreement shall be deemed to refer to any surviving or successor firm,
person, entity or corporation, or holding company, as the case may be.

 

11.6        Nonwaiver.  The failure of either party to enforce at any
time or for any period of time any one or more of the terms or conditions of
this Agreement shall not be a waiver of such term(s) or condition(s) or
of that party’s right thereafter to enforce each and every term and condition
of this Agreement.

 

11.7        Partial Invalidity.  If any terms, provision, covenant, or
condition of this Agreement is determined by an arbitrator or a court, as the
case may be, to be invalid, void, or unenforceable, such determination shall
not render any other term, provision, covenant or condition invalid, void or
unenforceable, and the Agreement shall remain in full force and effect
notwithstanding such partial invalidity.

 

9

 

11.8        Entire Agreement.  This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties with respect to the
subject matter of this Agreement and contains all of the covenants and
agreements between the parties with respect thereto.  Each party to this Agreement acknowledges
that no other representations, inducements, promises, or agreements, oral or
otherwise, have been made by any party, or anyone acting on behalf of any
party, which are not set forth herein, and that no other agreement, statement,
or promise not contained in this Agreement shall be valid or binding on either
party.

 

11.9        Paragraph Headings.  The paragraph headings used in this Agreement
are included solely for the convenience of the parties and shall not affect or
be used in connection with the interpretation of this Agreement.

 

11.10      No Strict Construction.  The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any
person.

 

11.11      Governing Law.  The laws of the State of California, other
than those laws denominated choice of law rules, shall govern the validity,
interpretation, construction and effect of this Agreement.

 

11.12      Gender.  Whenever in this Agreement words are used in
the masculine, feminine or neuter gender, they shall be read and construed as
in the masculine, feminine or neuter gender, whenever they should so apply.

 

11.13      Amendment.  Any amendment to this Agreement shall be
effective only if it is in writing and signed by each party or such party’s
authorized representative, and only to the extent that it is compliant with all
applicable codes and statutes, including but not limited to IRC 409A. In
addition, no amendment shall be effective to decrease a Participant’s Deferred
Compensation Account balance calculated as though the Participant had
experienced a Separation from Service as of the effective date of such
amendment or modification.

 

12.          Termination
or Modification of Agreement by Reason of Changes in the Law, Rules or
Regulations.

 

The Company is entering into this Agreement upon the
assumption that certain existing tax laws, the Code, rules and regulations
will continue in effect in their current form. If any said assumptions should
change and said change has a detrimental effect on this Agreement, then the
Company reserves the right to terminate or modify this Agreement accordingly.

 

10

 

IN WITNESS
WHEREOF, the Company and the Director have executed this Agreement effective as
of the date first above-written in the City of San Jose, California.

 

	
  HERITAGE COMMERCE CORP

  	
   

  	
   

  	
  DIRECTOR

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lawrence D. McGovern

  	
   

  	
  /s/ Jack Peckham

  
	
   

  	
  Lawrence D. McGovern- Executive

  	
   

  	
  Jack Peckham

  
	
   

  	
  Vice President/Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  December 29, 2008

  	
   

  	
  Date:

  	
  December 29, 2008

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
  Witness

  
						

 

11

 

DISTRIBUTION ELECTION FORM –
Director

 

Participant:                  JACK
PECKHAM

 

Social
Security Number:                                                    

 

The following
designates my election with respect to the manner in which I elect to receive
payments and/or distributions pursuant to my participation in the First Amended
and Restated Heritage Commerce Corp Deferred Fee Agreement:

 

FORM OF BENEFIT

 

You may choose
only one of the below options, and please designate your choice by initialing.

 

o       Upon my Separation from
Service, I elect to have my Director Benefit paid to me in one lump sum on the
first day of the first month immediately following my Separation from Service.

 

o            Upon my Separation from Service, I elect to
have my Director Benefit paid to me in Thirty-Six (36) substantially equal
monthly installment payments. Payments shall commence on the first day of the
first month immediately following my Separation from Service and continue
monthly thereafter for the designated period. The exact amount of each payment
shall be determined by dividing the balance of my Deferred Compensation Account
by the number of installments remaining, with the final installment to be the
entire remaining balance in my Deferred Compensation Account.

 

o            Upon my Separation from Service, I elect to
have my Director Benefit paid to me in Sixty (60) substantially equal monthly
installment payments. Payments shall commence on the first day of the first
month immediately following my Separation from Service and continue monthly
thereafter for the designated period. The exact amount of each payment shall be
determined by dividing the balance of my Deferred Compensation Account by the
number of installments remaining, with the final installment to be the entire
remaining balance in my Deferred Compensation Account.

 

o            Upon my Separation from Service, I elect to
have my Director Benefit paid to me in One Hundred and Twenty (120)
substantially equal monthly installment payments. Payments shall commence on
the first day of the first month immediately following my Separation from
Service and continue monthly thereafter for the designated period. The exact
amount of each payment shall be determined by dividing the balance of my
Deferred Compensation Account by the number of installments remaining, with the
final installment to be the entire remaining balance in my Deferred
Compensation Account.

 

o            Upon my Separation from Service, I elect to
have my Director Benefit paid to me in One Hundred and Eighty (180)
substantially equal monthly installment payments. Payments shall commence on
the first day of the first month immediately following my Separation from
Service and continue monthly thereafter for the designated period. The exact 

 

1

 

amount of each payment shall be determined by dividing the balance of
my Deferred Compensation Account by the number of installments remaining, with
the final installment to be the entire remaining balance in my Deferred
Compensation Account.

 

In addition to
the forgoing, I understand that any modification to the time and/or form of
distribution of amounts previously deferred must comply with the following
restrictions: (1) any modifying election must be made at least twelve (12)
months before it becomes effective; (2) a subsequent election must provide
for a deferral of the required payments for at least five additional (5) years;
and (3) deferral elections with respect to a specified time or fixed
schedule may not be made less than twelve (12) months before payments are
scheduled to be made.

 

	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
  Date

  

 

 

2

 

Beneficiary Designation Form For the First Amended and Restated

Heritage Commerce Corp Deferred Fee Agreement

 

I.              PRIMARY DESIGNATION

 

(You may refer to the
beneficiary designation information prior to completion of this form.)

 

A.            Person(s) as
a Primary Designation:

 

(Please
indicate the percentage for each beneficiary.)

 

	
  Name

  	
   

  	
  Relationship

  	
   

  	
   

  	
  / 

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
  (Street)

  	
  (City)

  	
  (State)

  	
   

  	
   

  	
   

  	
  (Zip)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Relationship

  	
   

  	
   

  	
  /

  	
   

  	
   %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
  (Street)

  	
  (City)

  	
  (State)

  	
   

  	
   

  	
   

  	
  (Zip)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Relationship

  	
   

  	
   

  	
  /

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
  (Street)

  	
  (City)

  	
  (State)

  	
   

  	
   

  	
   

  	
  (Zip)

  
																		

 

B.            Estate as
a Primary Designation:

 

My Primary Beneficiary is The Estate of
                                                                
as set forth in the last will and testament dated the
           day of
                          ,
           and any codicils
thereto.

 

C.            Trust as
a Primary Designation:

 

	
  Name of the Trust:

  	
   

  
	
   

  	
   

  
	
  Execution Date of the Trust: 

  	
              

  	
  /

  	
             

  	
  /

  	
              

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name of the Trustee:

  	
   

  
	
   

  	
   

  
	
  Is this an Irrevocable Life Insurance Trust?

  	
     o   Yes

  	
    o   No

  	
   

  
													

 

(If yes
and this designation is for a Split Dollar agreement, an Assignment of Rights
form should be completed.)

 

1

 

II.            SECONDARY (CONTINGENT) DESIGNATION

 

(Please indicate the
percentage for each beneficiary.)

 

	
  Name

  	
   

  	
  Relationship

  	
   

  	
   

  	
  / 

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
  (Street)

  	
  (City)

  	
  (State)

  	
   

  	
   

  	
   

  	
  (Zip)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Relationship

  	
   

  	
   

  	
  /

  	
   

  	
   %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
  (Street)

  	
  (City)

  	
  (State)

  	
   

  	
   

  	
   

  	
  (Zip)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Relationship

  	
   

  	
   

  	
  /

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
  (Street)

  	
  (City)

  	
  (State)

  	
   

  	
   

  	
   

  	
  (Zip)

  
																

 

B.            Estate as
a Secondary (Contingent) Designation:

 

My Secondary Beneficiary is The Estate of
                                                          
as set forth in the last will and testament dated the
           day of
                          ,
           and any codicils
thereto.

 

C.            Trust as
a Secondary (Contingent) Designation:

 

	
  Name of the Trust:

  	
   

  
	
   

  	
   

  
	
  Execution Date of the Trust:

  	
            

  	
   /

  	
              

  	
  /

  	
               

  	
   

  	
   

  
	
   

  	
   

  
	
  Name of the Trustee:

  	
   

  
											

 

All sums
payable under this First Amended and Restated Heritage Commerce Corp Deferred
Fee Agreement, by reason of my death shall be paid to the Primary
Beneficiary(ies), if he or she survives me, and if no Primary Beneficiary(ies)
shall survive me, then to the Secondary (Contingent) Beneficiary(ies).  This beneficiary designation is valid until
the Participant notifies the Company in writing.

 

	
   

  	
   

  	
   

  
	
  Participant

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness – Other than a Beneficiary

  	
   

  	
  Date

  

 

2

 

NOTE*** IF YOU RESIDE IN A
COMMUNITY PROPERTY STATE (ARIZONA, CALIFORNIA, IDAHO, LOUISIANA, NEVADA, NEW
MEXICO, TEXAS, WASHINGTON OR WISCONSIN), AND YOU ARE DESIGNATING A BENEFICIARY
OTHER THAN YOUR SPOUSE, THEN YOUR SPOUSE MUST ALSO SIGN THE BENEFICIARY
DESIGNATION FORM.

 

I am aware that my spouse, the above named Participant has designated
someone other than me to be the beneficiary under this First Amended and
Restated Heritage Commerce Corp Deferred Fee Agreement, and I hereby waive any
rights I may have to the potential benefits thereunder and under applicable
community property laws. I understand that this consent and waiver supersedes
any prior spousal consent or waiver under this plan.

 

	
  Spouse Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness (other than Participant):

  	
   

  	
   

  
					

 

3

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