Exhibit 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 18 th 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) busi
