HERITAGE COMMERCE CORP appointed new CEO

ITEM 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers 


On April 5, 2021, Heritage Commerce Corp (the "Company") and Heritage Bank of Commerce (the "Bank") entered into a new employment agreement with Walter T. Kaczmarek who was appointed by the Board of Directors as President and Chief Executive Officer of the Company and the Bank on March 12, 2021. The employment agreement is for one year and is automatically renewed each year. Under the agreement, Mr. Kaczmarek receives an annual salary of $721,000 with annual increases, if any, as determined by the Board of Directors' annual review of executive compensation. He received a grant of $540,000 of restricted common stock. He is eligible to participate in the Company's Management Incentive Plan. Mr. Kaczmarek may participate in the Company's 401(k) plan, under which he may receive matching contributions up to $3,000. The Company provides Mr. Kaczmarek, at no cost to him, group life, health, accident and disability insurance coverage for himself and his dependents. Mr. Kaczmarek is provided with life insurance coverage in the amount of $700,000. The Company will reimbursed Mr. Kaczmarek for up to $1,200 for tax consultation and tax return preparation. He is also reimbursed for expenses that exceed insurance coverage for an annual physical examination, certain long-term care policy expenses, monthly dues for one country club membership and one business club membership. He receives an automobile allowance in the amount of $1,000 per month, together with reimbursements for gasoline and maintenance expenditures.


If Mr. Kaczmarek's employment is terminated without cause or he resigns for good reason (as defined in the agreement), he is entitled to a lump sum payment equal to two times his base salary and his average annual bonus in the last three fiscal years (or shorter period). The appointment of a new President and Chief Executive Officer within 24 months of the date of his employment agreement will not result in a severance payment under the termination without cause or good reason resignation provisions. If Mr. Kaczmarek's employment is terminated or he resigns for good reason 120 days before, or within two years after, a change of control (as defined in the agreement), he will be paid a lump sum of 2.75 times his base salary and average annual bonus in the last three fiscal years (or shorter period). His shares of restricted common stock granted to him under his contract vest over three years, but vesting will accelerate if a new President and Chief Executive Officer is appointed, upon a change of control, a termination without cause or a termination for good reason. Additionally, following the termination of his employment, Mr. Kaczmarek has agreed to refrain from using trade secrets or proprietary information in certain activities that would be competitive with the Company.


A copy of Mr. Kaczmarek's employment agreement is attached hereto as Exhibit 10.1 and incorporated by reference.