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EX-2.1 - PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION - Paragon Commercial CORP | pbnc_ex21.htm |
EX-99.2 - PRESS RELEASE - Paragon Commercial CORP | pbnc_ex992.htm |
EX-99.1 - PRESS RELEASE - Paragon Commercial CORP | pbnc_ex99.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report
(Date of earliest event reported) April 26,
2017
PARAGON COMMERCIAL CORPORATION
(Exact
name of registrant as specified in its charter)
North Carolina
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001-37802
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56-2278662
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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3535 Glenwood Avenue
Raleigh, North Carolina
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27612
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(Address
of principal executive offices)
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(Zip
Code)
|
Registrant’s
telephone number, including area code (919)
788-7770
Not
applicable
|
(Former name or
former address, if changed since last report.)
|
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☑ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2
of the Securities Exchange Act of 1934.
Emerging growth
company ☑
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☑
Item
1.01
Entry
into a Material Definitive Agreement.
On
April 26, 2017, Paragon Commercial Corporation
(“Paragon”) and Paragon Commercial Bank (“Paragon
Bank”), the wholly owned bank subsidiary of Paragon, entered
into an Agreement and Plan of Reorganization (the “Merger
Agreement”) with TowneBank and TB Acquisition, LLC (“TB
Acquisition”). Pursuant to the terms of the Merger Agreement,
Paragon will merge with and into TB Acquisition (the
“Merger”) and Paragon Bank will subsequently merge with
and into TowneBank (the “Bank Merger” and, together
with the Merger, the “Transaction”). TB Acquisition
will be the surviving entity in the Merger and TowneBank will be
the surviving entity in the Bank Merger. Paragon and TowneBank
anticipate that the Transaction will close in the fourth quarter of
2017, subject to customary closing conditions, including
stockholder and regulatory approvals. The Merger Agreement was
approved by the boards of directors of Paragon, Paragon Bank, and
TowneBank.
Under
the terms of the Merger Agreement, Paragon’s stockholders
will be entitled to receive 1.7250 shares (the “Exchange
Ratio”) of TowneBank common stock for each share of Paragon
common stock. Each option to purchase shares of Paragon common
stock will be converted into a replacement option of TowneBank on
the same terms and conditions applicable to Paragon stock options,
as adjusted based on the Exchange Ratio. Similarly, each Paragon
restricted stock award that is outstanding immediately before the
effective date of the Transaction will be converted into a
replacement stock award of TowneBank on the same terms and
conditions applicable to the Paragon restricted stock award, but
taking into account any acceleration of vesting thereof in
Paragon’s equity plans or individual award agreements, and as
adjusted based on the Exchange Ratio.
At
the effective date of the Transaction, Robert C. Hatley and Howard
Jung, current members of the board of directors of Paragon and
Paragon Bank, will be appointed to the board of directors of
TowneBank.
Paragon
will prepare and file a proxy statement with the Securities and
Exchange Commission (“SEC”) in connection with the
solicitation of proxies from the stockholders of Paragon for
Paragon’s stockholder meeting.
In
connection with the execution of the Merger Agreement, all of the
Paragon’s directors, executive officers, and owners of 10% or
more of Paragon’s outstanding common stock entered into
affiliate agreements with TowneBank pursuant to which such
individuals or entities, in their capacities as stockholders, have
agreed, among other things, to vote their respective shares of
Paragon common stock in favor of the approval of the Merger
Agreement. All of the directors of Paragon and Paragon Bank also
have entered into noncompete agreements with TowneBank. The forms
of affiliate agreement and noncompete agreement are included in
Exhibit 2.1 as exhibits to the Merger Agreement and are
incorporated herein by reference.
Paragon
has agreed to customary covenants, including, among others,
covenants relating to (1) the conduct of its business during
the interim period between the execution of the Merger Agreement
and the effective date of the Transaction, including specific
forbearances with respect to its business activities,
(2) Paragon’s obligation to call a meeting of its
stockholders to approve the Merger Agreement, and, subject to
certain exceptions, that its board of directors recommend that
Paragon stockholders vote to approve the Merger Agreement and
(3) Paragon’s non-solicitation obligations regarding
alternative acquisition proposals. The Merger Agreement also
contains provisions that provide for the termination of the Merger
Agreement in certain circumstances, including a decline in the
price of TowneBank common stock relative to a specified bank stock
index. Under specified circumstances, these termination provisions
may require Paragon to pay TowneBank a termination fee of $12.0
million.
The
foregoing summary of the Merger Agreement is not complete and is
qualified in its entirety by reference to the full text of the
Merger Agreement, a copy of which is attached hereto as Exhibit 2.1
and incorporated by reference herein.
The
Merger Agreement has been included to provide investors with
information regarding its terms. It is not intended to provide any
other factual information about the parties thereto. The
representations, warranties and covenants contained in the Merger
Agreement were made only for the purposes of such agreement and as
of specific dates, were made solely for the benefit of the parties
to the Merger Agreement and may be intended not as statements of
fact, but rather as a way of allocating risk to one of the parties
if those statements prove inaccurate. In addition, the assertions
embodied in those representations, warranties and covenants are
qualified by information in the confidential disclosure schedules
that the parties have exchanged in connection with the signing of
the Merger Agreement. The disclosure schedules contain information
that modifies, qualifies and creates exceptions to the
representations, warranties and covenants set forth in the Merger
Agreement. Accordingly, investors should not rely on the
representations and warranties as the actual state of facts at the
time they were made or otherwise.
Additional Information and Where to Find It
This
report does not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or
approval. In connection with the Transaction, Paragon will file
with the SEC a preliminary proxy statement. Paragon will deliver a
definitive proxy statement/prospectus to its stockholders seeking
approval of the Merger and related matters. In addition, each of
TowneBank and Paragon may file other relevant documents concerning
the proposed Transaction with the Federal Deposit Insurance
Corporation (“FDIC”) and SEC.
Paragon’s stockholders
are strongly urged to read the definitive proxy
statement/prospectus regarding the proposed Transaction when it
becomes available and other relevant documents filed with the FDIC
and SEC, as well as any amendments or supplements to those
documents, because they will contain important information about
TowneBank, Paragon and the proposed
Transaction. Free copies
of the definitive proxy statement/prospectus, as well as other
filings containing information about Paragon, may be obtained after
their filing at the SEC’s website (http://www.sec.gov). In
addition, free copies of the definitive proxy statement/prospectus,
when available, also may be obtained by directing a request by
telephone or mail to Paragon Commercial Corporation, 3535 Glenwood
Avenue, Raleigh, North Carolina 27612, Attention: Investor
Relations (telephone: (919) 788-7770), or by accessing
Paragon’s website at https://www.paragonbank.com under
“About Us—Investor
Relations.”
Paragon,
TowneBank and their respective directors and executive officers may
be deemed to be participants in the solicitation of proxies from
Paragon’s stockholders in connection with the proposed
Transaction. Information about the directors and executive
officers of Paragon and TowneBank and other persons who may be
deemed participants in the solicitation, including their interests
in the Transaction, will be included in the definitive proxy
statement/prospectus when it becomes available. Additional
information about Paragon’s executive officers and directors
can be found in Paragon’s final prospectus filed with the SEC
on June 17, 2016. Additional information regarding
TowneBank’s executive officers and directors can be found in
TowneBank’s definitive proxy statement in connection with its
2017 Annual Meeting of Stockholders filed with the FDIC on April
21, 2017. You may obtain free copies of each document from
Paragon as described in the preceding paragraph and from TowneBank
by directing a request by telephone or mail to TowneBank, 6001
Harbour View Boulevard, Suffolk, Virginia 23425, Attention:
Investor Relations (telephone: (757) 638-6794), or by accessing
TowneBank’s website at https://townebank.com under
“Investor Relations.” The information on
TowneBank’s and Paragon’s websites is not, and shall
not be deemed to be, a part of this report or incorporated into
other filings either company makes with the FDIC or
SEC.
Forward-Looking Statements
Statements
made in this report, other than those concerning reported
historical financial information, may be considered forward-looking
statements, which speak only as of the date of this report and are
based on current expectations and involve a number of assumptions.
These include statements as to the anticipated benefits of the
Transaction, including future financial and operating results, cost
savings and enhanced revenues that may be realized from the
Transaction as well as other statements of expectations regarding
the Transaction and any other statements regarding future results
or expectations. Each of TowneBank and Paragon intends such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and is including this
statement for purposes of these safe harbor provisions. The
companies’ respective abilities to predict results, or the
actual effect of future plans or strategies, is inherently
uncertain. Factors which could have a material effect on the
operations and future prospects of each of TowneBank and Paragon,
and the resulting company, include but are not limited to: the
businesses of TowneBank and Paragon may not be integrated
successfully or such integration may be more difficult,
time-consuming or costly than expected; expected revenue synergies
and cost savings from the Transaction may not be fully realized or
realized within the expected timeframe; revenues following the
Transaction may be lower than expected; customer and employee
relationships and business operations may be disrupted by the
Transaction; the ability to obtain required regulatory and
stockholder approvals, and the ability to complete the Transaction
on the expected timeframe may be more difficult, time-consuming or
costly than expected; changes in interest rates, general economic
and business conditions; legislative/regulatory changes; the
monetary and fiscal policies of the U.S. government, including
policies of the U.S. Treasury and the Board of Governors of the
Federal Reserve; the quality and composition of the loan and
securities portfolios; demand for loan products; deposit flows;
competition; demand for financial services in the companies’
respective market areas; the companies’ respective
implementation of new technologies and their ability to develop and
maintain secure and reliable electronic systems; changes in the
securities markets; and changes in accounting principles, policies
and guidelines; and other risk factors detailed from time to time
in filings made by TowneBank with the FDIC or Paragon with the SEC.
TowneBank and Paragon undertake no obligation to update or clarify
these forward-looking statements, whether as a result of new
information, future events or otherwise.
Item
2.02
Results
of Operations and Financial Condition.
On
April 27, 2017, Paragon issued a press release announcing its
financial results for the three months ended March 31, 2017. A copy
of the press release is attached hereto as Exhibit 99.2 and is
incorporated herein in its entirety by reference.
Pursuant to General
Instruction B.2 of Current Report on Form 8-K, the information
contained in, or incorporated into, Item 2.02, including the press
release attached as Exhibit 99.2, is being furnished and shall not
be deemed “filed” for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference into any
registration statement or other filing under the Securities Act of
1933, as amended, or the Exchange Act, except as shall be expressly
set forth by specific reference to such filing.
Item
9.01
Financial
Statements and Exhibits.
(d) Exhibits.
Exhibit No.
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Description of Exhibit
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2.1
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Agreement
and Plan of Reorganization, dated April 26, 2017, by and among
TowneBank, TB Acquisition, LLC, Paragon Commercial Corporation and
Paragon Commercial Bank
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99.1
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Press
Release dated April 27, 2017 announcing the Merger Agreement with
TowneBank
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99.2
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Press
Release dated April 27, 2017 announcing Paragon Commercial
Corporation’s First Quarter 2017 Financial
Results
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SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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PARAGON
COMMERCIAL CORPORATION
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Date: May 1,
2017
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By:
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/s/
Steven
E. Crouse
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Steven E.
Crouse
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Executive Vice
President and
Chief
Financial Officer
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EXHIBIT INDEX
Exhibit No.
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Description of Exhibit
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2.1
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Agreement
and Plan of Reorganization, dated April 26, 2017, by and among
TowneBank, TB Acquisition, LLC, Paragon Commercial Corporation and
Paragon Commercial Ban
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99.1
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Press
Release dated April 27, 2017 announcing the Merger Agreement with
TowneBank
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99.2
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Press
Release dated April 27, 2017 announcing Paragon Commercial
Corporation’s First Quarter 2017 Financial
Results
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