Exhibit 10.13
HERITAGE BANK OF COMMERCE
DEFERRED FEE AGREEMENT
THIS AGREEMENT is made effective
as of June 30, 1997 by and between HERITAGE BANK OF COMMERCE (the
"Bank"), and Jack Peckham, (the "Director").
RECITALS
WHEREAS, to encourage the
Director to remain a member of the Bank's Board of Directors, the
Bank desires to provide to the Director an opportunity to defer
fees and obtain certain benefits related thereto.
NOW, THEREFORE, in consideration
of the services to be rendered by the Director to the Bank in the
future and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties agree as
follows:
AGREEMENT
Article I.
Definitions
1.1 Definitions Whenever
used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1.1 Change in Control
The term "Change in Control" shall mean (i) when any "person", as
such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act") (other than the
Employer, a subsidiary thereof or an employee benefit plan of
Employer, including any trustee of such plan acting as trustee) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Employer representing fifty percent (50%) or more of the combined
voting power of the Employer's then outstanding securities, where
such person's beneficial ownership of the Employer's securities was
not initiated by the Employer or approved by the Employer's Board
of Directors; or (ii) the occurrence of a transaction requiring
shareholder approval, and involving the sale of all or
substantially all of the assets of the Employer or the merger of
the Employer with or into another corporation, where such merger
was not initiated by the Employer and in which Employer is not the
surviving entity; or (iii) a change in the composition of the Board
of Directors of the Employer, as a result of which fewer than a
majority of the directors are Incumbent Directors (which "Incumbent
Directors" shall mean directors who either (A) are directors of the
Employer as of the date hereof, or (B) are elected, or nominated
for election, to the Board of Directors of the Employer with the
affirmative votes of at least a majority of the Incumbent Directors
at the time of such election or nomination (but shall not include
an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of
directors to the Employer)); or (iv) any liquidation or dissolution
of the Employer.
1.1.2 Code The term "Code"
shall mean the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section
as it now exists and to any successor provision.
1.1.3 Distribution Date
The term "Distribution Date" means the earlier of ten (10) years
after the date of this Agreement or upon the Director's Termination
of Service as defined below.
1.1.4. Deferral Account
The term "Deferral Account" means the account established by the
Bank on its books to record the amount of fees deferred by the
Director and interest accrued thereon.
1.1.5 Deferral Period The
term "Deferral Period" means the period of time beginning with the
date of this Agreement and ending with the earlier of the
Distribution Date or the Director's Termination of
Service.
1.1.6 Benefit Period The
term "Benefit Period" means the period of time beginning with the
earlier of the Distribution Date or the Director's Termination of
Service and ending with payment in full of the Director's Deferral
Account balance.
1.1.7 Election Form The
term "Election Form" means the Form attached as Exhibit
A.
1.1.8 Fees. The term
"Fees" means the total fees payable to the Director.
1.1.9 Termination of
Service The term "Termination of Service" means the Director's
ceasing to be a member of the Bank's Board of Directors for any
reason whatsoever.
Article 2. Deferral
Election
2.1 Initial Deferral
Election The Director shall make an initial deferral election
under this Agreement by completion and delivery to the Bank of the
Election Form attached hereto as Exhibit A. The Election Form shall
set forth the amount of Fees to be deferred, the form of benefit
payment and designation of beneficiary. The Election Form shall be
delivered to the Bank not later than June 30, 1997 and effective to
defer only those Fees earned for services performed after June 30,
1997.
2.2 Deferred Election
Changes The Director may modify the amount of Fees to be
deferred and/or form of benefit payment under Section 2.1 by filing
a subsequent signed Election Form with the Bank within twenty (20)
days prior to the end of a calendar year preceding the calendar
year in which the Fees are to be deferred and/or the change in
benefit payment is to apply and in each case by obtaining written
approval of the Board of Directors of the Bank. Such modified
deferrals and/or form of benefit payment shall not be effective
until the calendar year following the year in which the subsequent
Election Form is received by the Bank.
Article 3. Deferral
Account
3.1 Deferral Account The
Bank shall establish a Deferral Account on its books for the
Director, and shall credit to the Deferral Account the following
amounts:
3.1.1 Deferrals The Fees
deferred by the Director on the first day of the month following
the month in which the Fees were earned.
3.1.2 Interest On the last
day of each calendar month during the Deferral Period only, and
immediately prior to the payment of any benefits, the Deferral
Account will be credited with interest earned during that month.
The applicable interest rate shall be eight percent (8%) per annum
through December 31, 2006 and at the same rate for each year
thereafter unless changed prior to the beginning of each subsequent
year by resolution of the Bank's Board of Directors, in its sole
discretion. Interest earned will be calculated by taking the
applicable rate of interest multiplied by the principal balance on
the last day of each month, divided by 365 days, multiplied by the
number of days in the month. At the end of each calendar year, the
interest earned during the year will be posted to the account and
only then become principal and entitled to future interest
accrual.
3.2 Statement of Accounts
The Bank shall provide to the Director at each regularly scheduled
Board of Directors meeting, a monthly statement setting forth the
Deferral Account balance.
3.3 Unsecured Creditor
Status The Deferral Account is solely an accounting device for
measuring amounts to be paid under this Agreement. The Deferral
Account is not a trust fund of any kind and the director has no
rights greater than those of a general unsecured creditor of the
Bank for purposes of the payment of benefits under this Agreement.
The Director's rights are not subject in any manner to the
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director or the
Director's creditors or beneficiaries.
Article 4. Deferral
Benefits
4.1 Termination of Service
Benefit Upon the earlier of the Director's Termination of
Service or the Distribution Date, the Bank shall pa
