Document:

Exhibit 10.1

 

AMENDMENT NO. 1

TO

CREDIT AGREEMENT

 

THIS AMENDMENT NO. 1 dated as of May 1, 2009 (this “Amendment”), is entered into by and between NIC, INC., a Colorado corporation, as the Borrower (the “Borrower”)
and BANK OF AMERICA, N.A., a national banking association, as Lender (the “Lender”).

 

RECITALS

 

A.            The Borrower and the Lender have entered into that
certain Credit Agreement dated as of May 2, 2007 as modified by that
certain Limited Waiver thereto dated July 22, 2008 (as so modified, the “Credit Agreement”).

 

B.            The Borrower and the Lender have agreed
to certain amendments to the Credit Agreement as more fully described herein.

 

C.            The
Amendment is subject to the representations and warranties of the Borrower and
upon the terms and conditions set forth in this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing Recitals, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, the Borrower and the
Lender hereby agree as follows:

 

SECTION 1.         DEFINED TERMS.  Capitalized terms used
herein but not otherwise defined herein shall have the meaning assigned to such
terms in the Credit Agreement.

 

SECTION 2.         AMENDMENTS.

 

2.1          Section 1.01 of the Credit Agreement is hereby
amended by amending and restating the defined terms set forth below to read in
their entirety as follows:

 

“Applicable
Rate” means, from time to time, the
following percentages per annum, based upon the Leverage Ratio as set forth in
the most recent Compliance Certificate received by the Lender pursuant to Section 6.02(b):

 

	
  Pricing Level

  	
   

  	
  Leverage Ratio

  	
   

  	
  Eurodollar

  Rate+

  Letters of

  Credit

  	
   

  	
  Base Rate+

  	
   

  
	
  1

  	
   

  	
  <1.25:1.00

  	
   

  	
  1.50

  	
  %

  	
  0

  	
   

  
	
  2

  	
   

  	
  >1.25:1.00

  	
   

  	
  1.75

  	
  %

  	
  0

  	
   

  

 

 

Any increase or decrease in the Applicable Rate
resulting from a change in the Leverage Ratio shall become effective commencing
on the 5th Business Day immediately following the date a Compliance Certificate
is delivered pursuant to Section 6.02(b);
provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then Pricing Level 2 shall
apply commencing on the 5th Business Day following the date such Compliance
Certificate was required to have been delivered.  The Applicable Rate in effect from the date
of Amendment No. 1 to this Agreement through June 30, 2009 shall be
determined based upon Pricing Level 1.

 

“Maturity  Date” means May 1, 2011; provided, however, that if
such date is not a Business Day, the Maturity Date shall be the next preceding
Business Day.

 

2.2          Section 2.08 of the Agreement is hereby amended
by amending and restating such Section in its entirety to read as follows:

 

“2.08      [Intentionally
Omitted.]”

 

SECTION 3.         LIMITATIONS ON AMENDMENT.

 

3.1          The amendments set forth in Sections 2
above is effective for the purposes set forth herein and will be limited
precisely as written and will not be deemed to (a) be a consent to any
other amendment, waiver or modification of any other term or condition of the
Credit Agreement or any other Loan Document, (b) otherwise prejudice any
right or remedy which the Lender may now have or may have in the future under
or in connection with the Credit Agreement or any other Loan Document or (c) be
a consent to any future amendment, waiver or modification of any other term or
condition of the Credit Agreement or any other Loan Document.

 

3.2          This Amendment is to be construed in connection with
and as part of the Loan Documents and all terms, conditions, representations,
warranties, covenants and agreements set forth in the Loan Documents, except as
herein waived, are hereby ratified and confirmed and will remain in full force
and effect.

 

SECTION 4.         REPRESENTATIONS AND WARRANTIES.  The Borrower represents and warrants to
the Lender as follows:

 

4.1          Immediately after giving effect to this Amendment the
representations and warranties of (i) the Borrower contained in Article V
of the Credit Agreement and (ii) each Loan Party contained in each other
Loan Document shall be true and correct in all material respects, except to the
extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier
date in all material respects, and the representations and warranties contained
in subsections (a) and (b) of Section 5.05 of the Credit
Agreement shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01 of the
Credit Agreement.

 

4.2          Immediately after giving effect to this Amendment, no
Default or Event of Default has occurred and is continuing.

 

2

 

SECTION 5.         EXPENSES.  The Borrower agrees to pay to the Lender upon
demand, the amount of any and all out-of-pocket expenses, including the
reasonable fees and expenses of its counsel, which the Lender may incur in
connection with the preparation, documentation, and negotiation of this
Amendment and all related documents.

 

SECTION 6.         REAFFIRMATION.  The Borrower hereby reaffirms
its obligations under each Loan Document (as amended hereby) to which it is a
party.

 

SECTION 7.           EFFECTIVENESS.  This Amendment will become effective as of the date
hereof upon:

 

(a)           the execution and delivery of this
Amendment, whether the same or different copies, by the Borrower and Lender;
and

 

(b)           the payment of a one time upfront fee of $37,500.00 which shall be fully earned by the Lender upon
the Lender’s execution and delivery of this Amendment.

 

SECTION 8.           GOVERNING LAW.  This Amendment will be governed by and will be
construed and enforced in accordance with the laws of the State of Missouri
applicable to agreements made and prepared entirely within such State; provided
that the Lender shall retain all rights arising under federal law.

 

SECTION 9.           CLAIMS, COUNTERCLAIMS, DEFENSES,
RIGHTS OF SET-OFF.  The Borrower hereby represents and
warrants to the Lender that it has no knowledge of any facts that would support
a claim, counterclaim, defense or right of set-off.

 

SECTION 10.           COUNTERPARTS.  This Amendment may be signed in any number of
counterparts, and by different parties hereto in separate counterparts, with
the same effect as if the signatures to each such counterpart were upon a
single instrument.  All counterparts will
be deemed an original of this Amendment.

 

[Remainder of Page Intentionally
Left Blank]

 

3

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.

 

	
  BORROWER:

  	
  NIC, INC.

  
	
   

  	
  a Colorado
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LENDER:

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

CONSENT
TO AMENDMENT NO. 1

TO
CREDIT AGREEMENT

 

Each of the undersigned are Guarantors party to that certain Continuing
Guaranty dated May 2, 2007 (the “Guaranty”) in
favor of Bank of America, N.A. pursuant to which the Guarantors have guaranteed
the obligations of NIC, INC. to
Bank of America, N.A., as Lender and L/C Issuer pursuant to or in connection
with that certain Credit Agreement dated May 1, 2007 (as amended,
supplemented or otherwise modified from time to time, the “Credit
Agreement”) and the other Loan Documents (as defined in the Credit
Agreement).  Each of the Guarantors
hereby consents to Amendment No. 1 to the Credit Agreement dated as of May 1,
2009.

 

Each Guarantor hereby reaffirms its obligations under the Guaranty.

 

IN WITNESS WHEREOF, the
Guarantors have caused this Consent to be executed as of May 1, 2009.

 

 

	
   

  	
  ALABAMA INTERACTIVE, LLC, an Alabama
  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ARKANSAS
  INFORMATION CONSORTIUM, LLC, an Arkansas limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  COLORADO
  INTERACTIVE, LLC, a Colorado limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Consent to Amendment No. 1
to Credit Agreement

 

S-1

 

	
   

  	
  HAWAII
  INFORMATION CONSORTIUM, LLC, a Hawaii limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IDAHO INFORMATION CONSORTIUM,
  LLC, an Idaho limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  INDIANA
  INTERACTIVE, LLC, an Indiana limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  IOWA
  INTERACTIVE, LLC, an Iowa limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  KANSAS
  INFORMATION CONSORTIUM, INC., a Kansas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Consent to Amendment No. 1
to Credit Agreement

 

S-2

 

	
   

  	
  KENTUCKY
  INTERACTIVE LLC, a Kentucky limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LOCAL
  GOVERNMENT ONLINE INDIANA, LLC, an Indiana limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  MAINE
  INFORMATION NETWORK, LLC, a Maine limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  MONTANA
  INTERACTIVE, LLC, a Montana limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  NICUSA,
  INC., a Kansas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Consent to Amendment No. 1
to Credit Agreement

 

S-3

 

	
   

  	
  NATIONAL
  INFORMATION CONSORTIUM TECHNOLOGIES, LLC, a California limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  NEBRASKA
  INTERACTIVE, LLC, a Nebraska limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  OKLAHOMA
  INTERACTIVE, LLC, an Oklahoma limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RHODE ISLAND INTERACTIVE, LLC, a Rhode
  Island limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Consent to Amendment No. 1
to Credit Agreement

 

S-4

 

	
   

  	
  SOUTH
  CAROLINA INTERACTIVE, LLC, a South Carolina limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  UTAH
  INTERACTIVE, LLC, a Utah limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  VERMONT
  INFORMATION CONSORTIUM, LLC, a Vermont limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  VIRGINIA
  INTERACTIVE, LLC, a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEST
  VIRGINIA INTERACTIVE, LLC a West Virginia limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Consent to Amendment No.
1 to Credit Agreement

 

S-5Exhibit 10.1

April 30, 2009

 

Heritage
Bank of Commerce

150
Almaden Boulevard

San
Jose, CA 95113

 

James
Mayer

2596
Danville Boulevard

Alamo,
CA 94501

 

Gentlemen:

 

Reference is made to that
certain Employment Agreement entered into as of February 8, 2007, as
amended December 29, 2008 (“Employment Agreement”)
by and between Heritage Bank of Commerce, a California banking corporation (the
“Bank”) and James Mayer, an individual (“Executive”) as modified by the Modification Letter Agreement
dated December 11, 2008 by and between the Bank and Executive (“Modification”).  Bank
and Executive desire to make certain modifications to the Employment Agreement
and Modification in accordance with the terms of this Letter Agreement.

 

Section 6(e)(iii) of
the Employment Agreement provides in full as follows:

 

If Executive gives written notice to the Bank during
the 18th full calendar month following the Effective
Date of his desire to terminate this Agreement and his employment with an
effective date 30 days following the date of delivery of such notice, then the
Bank shall accept the notice of termination and pay Executive $300,000, payable
$16,666.66 per month for 18 months commencing on the first full calendar month
following Executive’s termination date, provided however, that Executive does
not breach any of his remaining obligations under this Agreement or the Non-Compete
Non Solicitation and Confidentiality Agreement with HCC [Heritage Commerce
Corp] and the Bank dated the date hereof.

 

Pursuant to the Modification,
Bank and Executive modified Section 6(e)(iii) of the Employment
Agreement.  A copy of the Modification is
attached hereto as Exhibit “A”.

 

Pursuant to the U.S.
Treasury Capital Purchase Program authorized by the Troubled Asset Recovery
Program (“TARP”) provisions of the Emergency
Economic Stabilization Act of 2008 (“EESA”), on November 21,
2008, the Heritage Commerce Corp (parent of the Bank) entered into a Letter
Agreement (“Treasury Letter Agreement”) and related
Securities Purchase Agreement—Standard Terms with the United States Department
of the Treasury, pursuant to which the Company issued and sold (i) 40,000
shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A,
and (ii) a warrant to purchase 462,963 shares of the Company’s common
stock, no par value.

 

The Company has agreed that,
until such time as United States Department of the Treasury ceases to own any
debt or equity securities of the Company acquired pursuant to the Treasury Letter
Agreement, the Company will take all necessary action to ensure that its
benefit 

 

1

 

plans
with respect to its senior executive officers comply with Section 111(b) of
the EESA as implemented by any guidance or regulation under the EESA that has been
issued and is in effect as of the date of issuance of the series A preferred stock
and the warrant, and has agreed to not adopt any benefit plans with respect to,
or which covers, its senior executive officers that do not comply with the
EESA, and the applicable executives have consented to the foregoing.  Executive consented to the provisions of Section 111(b) at
the request of the Company.

 

The American Reinvestment
and Recovery Act of 2009 (“ARRA”) became
effective February 17, 2009.  ARRA
amends Section 111 of EESA to delete old Section 111 in its entirety
and to add new Section 111 executive compensation requirements for Capital
Purchase Program participants.  ARRA also
includes provisions directing the Secretary of the U.S. Treasury to impose additional
limits on compensation of executives of companies that participate in the
Capital Purchase Program as long as the U.S. Treasury owns the preferred stock
of such companies issued under the Capital Purchase Program.

 

ARRA directs the U.S.
Treasury to implement standards for companies to comply with these expanded
restrictions.  Until then, the Company is
complying with these provisions to the extent it believes reasonably
appropriate.  As of the date of this
Letter Agreement, the U.S. Treasury has not yet established definitive
standards required under ARRA or otherwise issued guidance regarding compliance
with ARRA for several of the other expanded requirements.  Therefore, the Company cannot determine at
this time the extent of any effect these regulations will have on the Company’s
compensation policies, programs or practices.

 

In view of the uncertainty
of the application of ARRA and any rules or regulations promulgated
thereunder to the payments agreed to by the Bank and the Executive under the
Modification, Bank and Executive have agreed to the following:

 

1.             At such time as the Bank is
permitted under ARRA to make the payments to the Executive under the Modification
(such date being the “Initial Payment Date”),
the Bank shall remit to Executive: (a) within fifteen (15) business days the
aggregate amount of payments that would have been paid to Executive as of the
Initial Payment Date if the payments required under the Modification had been
made commencing June 1, 2009 and up to the Initial Payment Date and accrued
interest from June 1, 2009 to the Initial Payment Date, and (b) any
remaining monthly payments when due under the Modification from and after the
Initial Payment Date, if any.  Accrued
interest shall be at an annual rate equal to the prime rate as published by the
Wall Street Journal on December 31 of the immediately preceding year in
which the payment is made.  For purposes
of example only:  if the Bank is
permitted to make the payments under ARRA on June 1, 2010, the Bank would
pay Executive within fifteen (15) business days the aggregate amount of $199,999.92
[12 months times $16,666.66], plus accrued interest, and the Bank would
continue to pay $16,666.66, per month thereafter for each of the next following
six months.  If, on the other hand, Bank
is not permitted to make the payments under ARRA until June 1, 2011, the
Bank would pay the executive $300,000, plus accrued interest, because by such
date all 18 month payments would have been paid to Executive had the payments
commenced on June 1, 2009.

 

2.             Bank agrees that it shall accrue
the funds payable to Executive under this Letter Agreement in accordance with
its general accounting practices for such type of payments.

 

2

 

3.             Notwithstanding Paragraph 1
above, if at the time the Executive has a separation from service, which shall
have the same meaning as provided in Treasury Regulation section 1.409A-1(h), and
the Executive is a “specified employee,” as defined under Treasury Regulation
section 1.409A-1(i), any and all amounts payable under this Agreement hereof in
connection with such separation from service that constitute deferred compensation
subject to section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”),
as determined by the Bank in its reasonable judgment, and that would (but for
this sentence) if paid within six (6) months following such separation
from service, cause a penalty tax to be imposed on such amounts under Section 409A,
such amounts shall instead be paid on the date that follows the date of such separation
from service by six (6) months or such longer time to avoid tax
liabilities under Section 409A.Each installment payment to be provided to
the Executive under this Agreement shall be a separate “payment” within the
meaning of Treasury Regulation section 1.409A-2(b)(2)(i).

 

4.             If the Executive is determined to
have a liability pursuant to Section 409A(a)(1)(B) (the “Liability”)
for a payment or payments as a result of this Letter Agreement, the Bank will
indemnify and hold Executive harmless from such Liability for six years after
the last payment under this Letter Agreement is made.  The Bank shall pay to Executive the amount
due for the Liability, if any, as soon as administratively practicable, but in
no event later than by end of the calendar year following the year in which
Executive remits the amount due for the Liability.  The Bank’s payment for the Liability during
one year may not affect its payment of the Liability in any other year.

 

5.             If any provision of this Agreement
is held invalid or unenforceable by any court of competent jurisdiction or
federal regulatory agency (including the U.S. Department of Treasury), the
other provisions of this Agreement will remain in full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

 

6.             This Letter Agreement shall be
governed by the laws of the State of California.

 

7.             Except as provided in this Letter
Agreement, the Employment Agreement shall remain in full force and effect
without further modifications or amendments.

 

The parties hereto have
executed this Letter Agreement on the date first indicated above.

 

	
   

  	
  HERITAGE
  BANK OF COMMERCE,

  
	
   

  	
  a
  California corporation

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  Walter
  T. Kaczmarek

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Walter
  T. Kaczmarek

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James
  Mayer

  
	
   

  	
   

  	
  James
  Mayer

  

 

3

 

EXHIBIT “A”

 

December 11, 2008

 

Heritage
Commerce Corp

150
Almaden Boulevard

San
Jose, CA  95113

 

James
Mayer

2596
Danville Boulevard

Alamo,
CA  94501

 

Gentlemen:

 

Reference is made to that
certain Employment Agreement entered into as of February 8, 2007 (“Employment
Agreement”) by and between Heritage Bank of Commerce, a California banking
corporation (the “Bank”) and James Mayer, an individual (“Executive”).  Bank and Executive desire to make certain
modifications to the Employment Agreement in accordance with the terms of this
Letter Agreement.

 

Section 6(e)(iii) of
the Employment Agreement provides in full as follows:

 

“If Executive gives written
notice to the Bank during the 18th full calendar month following the Effective
Date of his desire to terminate this Agreement and his employment with an
effective date 30 days following the date of delivery of such notice, then the
Bank shall accept the notice of termination and pay Executive $300,000, payable
$16,666.66 per month for 18 months commencing on the first full calendar month
following Executive’s termination date, provided however, that Executive does
not breach any of his remaining obligations under this Agreement or the
Non-Compete Non Solicitation and Confidentiality Agreement with HCC [Heritage
Commerce Corp] and the Bank dated the date hereof.”

 

Bank and Executive desire to
modify Section 6(e)(iii) and hereby agree as follows:

 

1.             Executive hereby gives written notice to the Bank that
Executive desires to terminate his employment with such termination to be
effective May 1, 2009.  Executive
shall remain an employee of Bank and the Term of his employment (as defined in
the Employment Agreement) shall remain in force until May 1, 2009.

 

2.             Bank hereby accepts Executive’s notice of termination of
employment to be effective May 1, 2009 and agrees to pay to Executive
$300,000, payable $16,666.66 per month for 18 months commencing on June 1,
2009, provided, however, that Executive does not breach any of his remaining
obligations under the Employment Agreement which by their terms continue after
the Term of the Employment Agreement or the terms of that certain Non-Compete
Non-Solicitation and Confidentiality Agreement by and among Heritage Commerce
Corp, the Bank and the Executive dated February 8, 2007.

 

1

 

3.             For purposes of Section 5.7 of the Employment
Agreement, the “Date of Termination” shall be May 1, 2009, provided,
however, that if Executive’s employment is terminated prior to May 1, 2009
under the terms of the Employment Agreement other than Section 6(e)(iii) or
this Letter Agreement, the “Date of Termination” shall be as provided in Section 5.7.

 

Except as provided in this
Letter Agreement, the Employment Agreement shall remain in full force and
effect without further modifications or amendments.

 

The parties hereto have
executed this Letter Agreement on the date first indicated above.

 

	
   

  	
  HERITAGE
  BANK OF COMMERCE,

  
	
   

  	
  a
  California banking corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
  /s/
  / Walter T. Kaczmarek

  
	
   

  	
   

  	
  Walter
  T. Kaczmarek

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  James Mayer

  
	
   

  	
  James
  Mayer

  

 

2

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