| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
Effective at 3:00 p.m. (Pacific Daylight Time) on October 11, 2019 (the “Effective Time”), Heritage Commerce Corp (the “Company”) completed the previously announced merger transaction with Presidio Bank (“Presidio”), in accordance with the terms and conditions of the Agreement and Plan of Merger and Reorganization, dated as of May 16, 2019, by and among the Company, Heritage Bank of Commerce (“HBC”), a wholly-owned subsidiary of the Company, and Presidio (the “Merger Agreement”). At the Effective Time, Presidio merged with and into HBC, with HBC being the surviving entity (the “Merger”). Pursuant to the Merger Agreement, holders of Presidio common stock will receive 2.47 shares of common stock of the Company for each share of Presidio common stock held immediately prior to the Effective Time of the Merger, with cash to be paid in lieu of any fractional shares of common stock of the Company (the “Merger Consideration”). At the Effective Time, (i) each outstanding unvested restricted stock unit of Presidio automatically vested in full and each outstanding restricted stock unit will be converted into the right to receive the Merger Consideration, (ii) each outstanding unvested restricted stock award automatically vested in full and each restricted award and will be entitled to the Merger Consideration, (iii) each outstanding unvested Presidio stock option automatically vested in full, and each outstanding stock option was assumed by the Company and converted into the right to receive a number of shares of the Company’s common stock at an exercise price, both adjusted for the Merger Consideration. As a result of the Merger, the Company issued approximately 15,684,106 shares of Company common stock and reserved 1,176,757 shares of common stock for the assumed stock options.
Thepre-Merger outstanding shares of the Company’s common stock remained outstanding and were not affected by the Merger. Following the Merger, the Company will have outstanding approximately 59,193,512 shares of its common stock.
The foregoing description of the Merger and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is incorporated herein by reference from Exhibit 2.1 included herewith.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
The bylaws of the Company and HBC provide for a board of directors with a range of 9 to 15 positions with the specific number fixed by resolution of the respective board of directors. On October 10, 2019, the respective boards of directors of the Company and HBC approved a resolution to expand the number of directors to 13.
On October 10, 2019, the respective boards of directors of the Company and HBC also resolved that, effective upon the consummation of the Merger, as contemplated by the Merger Agreement, Bruce H. Cabral, Stephen G. Heitel, and Marina Park Sutton, would be appointed to serve on the boards of directors of the Company and HBC. In addition, pursuant to the Merger Agreement, these three new directors will be included on the list of nominees for directors presented by the Company’s board of directors for which the Company’s board of directors will solicit proxies at the Company’s 2020 and 2021 annual meetings of shareholders. Ms. Sutton will be appointed to the Company’s Audit Committee, Corporate Governance Committee and Compensation Committee. Mr. Cabral will be appointed to the Company’s Audit Committee and the HBC Loan Committee. Mr. Heitel will be appointed to the HBC Loan Committee.
Each of the new directors will be entitled to receive the compensation that other directors of the Company receive, as determined by the Company’s board of directors from time to time. Eachnon-employee director who is not the Chairman of the Company’s board of directors currently receives an annual retainer of $50,000. In addition, the Company currently grants annual restricted stock awards with a value of $27,500 to itsnon-employee directors (other than the Chairman of the Board), with such restricted stock awards having a one year vesting period. The new directors will receive their initial annual grant of restricted stock awards at the time of the annual grant to all directors in 2020. Such awards will be made pursuant to the Company’s 2013 Equity Incentive Plan.
On October 14, 2019, the Company issued a press release announcing the completion of the Merger. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
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