PACIFIC PREMIER BANCORP, INC. (NASDAQ:PPBI) Files An 8-K Entry into a Material Definitive Agreement

PACIFIC PREMIER BANCORP, INC. (NASDAQ:PPBI) Files An 8-K Entry into a Material Definitive Agreement

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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On December 12, 2016, Pacific Premier Bancorp, Inc., a Delaware
corporation (PPBI), and Heritage Oaks Bancorp, a California
corporation (HEOP), entered into an Agreement and Plan of
Reorganization (the Merger Agreement) to which HEOP will be merged
with and into PPBI, with PPBI surviving (the Corporate Merger),
immediately followed by the merger of HEOPs wholly-owned bank
subsidiary, Heritage Oaks Bank (Heritage Oaks Bank), with and into
Pacific Premier Bank, the wholly-owned bank subsidiary of PPBI
(Pacific Premier), with Pacific Premier surviving (the Bank
Merger). The Corporate Merger and Bank Merger are collectively
referred to in this Current Report on Form 8-K as the Proposed
Transaction. A copy of the Merger Agreement is included as Exhibit
2.1 to this Current Report on Form 8-K. A summary of the material
terms of the Merger Agreement follows.
Merger Consideration
The consideration payable to HEOP shareholders upon completion of
the Proposed Transaction (the Merger Consideration) will consist of
whole shares of PPBI common stock, par value $0.01 per share (PPBI
Common Stock), and cash in lieu of fractional shares of PPBI Common
Stock. Upon consummation of the Corporate Merger, each share of
HEOP common stock, no par value per share (HEOP Common Stock),
issued and
outstanding immediately prior to the effective time of the
Corporate Merger will be canceled and converted into the right to
receive 0.3471 shares of PPBI Common Stock (the Exchange Ratio).
HEOP Options, Shares of Restricted Common Stock and Restricted
Stock Units
Upon consummation of the Corporate Merger, each outstanding and
unexercised option to acquire shares of HEOP Common Stock will be
assumed by PPBI and converted automatically into an option to
purchase shares of PPBI Common Stock (Converted HEOP Option), in
accordance with the terms of the Heritage Oaks Bancorp 2015 Equity
Incentive Plan and the 2005 Equity-Based Cooperation Plan
(collectively the HEOP Stock-Based Plan). The number of shares of
PPBI Common Stock subject to such Converted HEOP Option shall be
equal to the number of shares of HEOP Common Stock subject to such
Converted HEOP Option immediately prior to the closing of the
Proposed Transaction multiplied by the Exchange Ratio, provided
that any fractional shares of PPBI Common Stock resulting from such
multiplication shall be rounded down to the nearest share. The per
share exercise price under each such Converted HEOP Option will be
adjusted by dividing the per share exercise price under each such
option to purchase shares of HEOP Common Stock prior to its
assumption and conversion by the Exchange Ratio, provided that such
exercise price will be rounded up to the nearest cent.
Each cash-settled restricted stock unit issued under a HEOP
Stock-Based Plan (a HEOP Restricted Stock Unit) which is vested and
outstanding as of the closing of the Proposed Transaction, will be
entitled to receive a single lump sum cash payment, equal to the
sum of (i) the product of (A) and (B) where (A) equals the product
of the number of HEOP Restricted Stock Units and the Exchange Ratio
and (B) equals the average closing price of PPBI Common Stock
during the 20 trading day period ending on the fifth business day
prior to the effective time of the Corporate Merger (the PPBI
Average Share Price), plus (ii) any dividends previously accrued
under the HEOP Stock-Based Plans, provided that any fractional HEOP
Restricted Stock Units remaining will receive an amount determined
by multiplying the fractional share interest by the PPBI Average
Share Price, rounded to the nearest whole cent.
Each unvested cash-settled HEOP Restricted Stock Unit which is
outstanding as of the closing of the Proposed Transaction, will be
assumed by PPBI and will be converted into a right to receive cash
payments based upon the value of shares of PPBI Common Stock. Each
unvested cash-settled HEOP Restricted Stock Unit assumed by PPBI
will represent the right to receive cash payments based upon the
value of shares of PPBI Common Stock. The number of shares of PPBI
Common Stock referenced in each such cash-settled restricted stock
unit will be equal to the number of shares of HEOP Common Stock
subject to such cash-settled HEOP Restricted Stock Unit immediately
prior to the effective time of the Corporate Merger multiplied by
the Exchange Ratio, including any fractional shares of PPBI Common
Stock. Any dividends accrued under the HEOP Stock-Based Plans with
respect to cash-settled HEOP Restricted Stock Units will continue
to be accrued and deferred until such time as the award vests and
is paid.
Each unvested award of restricted shares of HEOP Common Stock (the
HEOP Restricted Stock) that is outstanding as of the closing of the
Proposed Transaction will be assumed by PPBI and converted into
restricted shares of PPBI Common Stock. The number of shares of
PPBI Common Stock subject to each award of PPBI restricted stock
will be equal to the number of shares of HEOP Common Stock subject
to such award of HEOP Restricted Stock immediately prior to the
effective time of the Corporate Merger multiplied by the Exchange
Ratio, provided that any fractional shares of PPBI Common Stock
will receive cash in lieu of fractional shares of PPBI Common
Stock.
PPBI will not assume outstanding performance-based restricted stock
units issued for the performance period extending from January 1,
2016 through December 31, 2018 (the HEOP Performance Restricted
Stock Units). The HEOP Performance Restricted Stock Units will
become vested immediately prior to the effective time of the
Corporate Merger, and each of the holders thereof will be entitled
to receive a single lump sum cash payment equal to the product of
(A), (B) and (C), where (A) equals 50% of the target number of
shares of HEOP Common Stock subject to the HEOP Performance
Restricted Stock Units, (B) equals the Exchange Ratio, and (C)
equals the PPBI Average Share Price.
Shareholder Agreements
As an inducement for PPBI to enter into the Merger Agreement, each
director and certain executive officers of HEOP who owns shares of
HEOP Common Stock, reflecting an aggregate of approximately 30.73%
of the outstanding HEOP Common Stock, entered into a shareholder
agreement with PPBI and HEOP to which he or she agreed, among other
things, to vote all shares of HEOP Common Stock beneficially owned
by him or her in favor of adoption and approval of the Merger
Agreement and any other matters required to be approved for the
consummation of the Proposed Transaction at any meeting of the
shareholders of HEOP. These shareholders also agreed to certain
restrictions on their ability to transfer their shares of HEOP
Common Stock until at least a majority of all issued and
outstanding shares of HEOP Common Stock have been irrevocably voted
in favor of the Merger, the Merger Agreement and the transactions
contemplated thereby. In addition, subject to certain enumerated
exceptions, these shareholders agreed to refrain from soliciting
customers and employees of HEOP or its subsidiaries for a period of
two (2) years subject to, and following the closing of the Proposed
Transaction. The shareholder agreement is substantially in the form
included as Annex A to the Merger Agreement, which is attached to
this Current Report on Form 8-K as Exhibit 2.1.
Assumption of HEOP Indenture Obligations
In connection with the closing of the Proposed Transaction, PPBI
will assume the obligations under HEOPs three (3) indentures (the
Indentures). In connection with the assumption of the Indentures,
PPBI and HEOP will enter into supplemental indentures or other
documents reasonably required by the trustees to make such
assumptions effective. to the Indentures, HEOP had junior
subordinated debentures issued and outstanding with a carrying
value of $10.6 million as of September 30, 2016.
Appointment of Directors
to the Merger Agreement, PPBI is required to take all action
necessary to appoint or elect, effective as of the effective time
of the Proposed Transaction, three individuals, each of whom must
be mutually agreeable to PPBI and HEOP, as directors of PPBI and
Pacific Premier. HEOP and PPBI have selected Simone F. Lagomarsino,
the President and Chief Executive Officer of HEOP and Heritage Oaks
Bank, Michael J. Morris, Chairman of the Board of HEOP and Heritage
Oaks Bank, and Michael E. Pfau, Vice-Chairman of the Board of HEOP
and Heritage Oaks Bank. Each individual will serve until the first
annual meeting of shareholders of PPBI following the effective time
of the Proposed Transaction and until his or her successor is
elected and qualified. Subject to the fiduciary duties of the PPBI
Board of Directors, PPBI is required to include such individuals on
the list of nominees for director presented by the PPBI Board of
Directors and for which the PPBI Board of Directors will solicit
proxies at the first annual meeting of shareholders of PPBI
following the effective time of the Proposed Transaction.
Employment Agreements
to the terms of the Merger Agreement, Pacific Premier has entered
into employment agreements with Rob Osterbauer and Brooks Wise,
which will become effective upon consummation of the Proposed
Transaction. to the terms of their respective employment
agreements, Messrs. Osterbauer and Wise will each be employed as an
Executive Vice President, Market President, of Pacific Premier. The
terms of their employment will be one (1) year, subject to earlier
termination as provided in the employment agreements.
Representations and Warranties
The Merger Agreement contains customary representations and
warranties from HEOP to PPBI, which are qualified by the
confidential disclosures provided by HEOP to PPBI, and customary
representations and warranties from PPBI to HEOP.
Business Pending the Proposed Transaction
HEOP is required under the Merger Agreement to conduct its business
in the ordinary and usual course, consistent with past practice, to
use reasonable best efforts to preserve its business organization,
keep available the present services of its employees and preserve
for itself and PPBI the goodwill of the customers of HEOP and
others with whom business relations exist.
Conditions to the Proposed Transaction
The consummation of the Proposed Transaction is subject to a number
of conditions, which include: (i) the approval of the Merger
Agreement by HEOPs shareholders and the approval of the issuance of
shares of PPBI Common Stock by PPBIs shareholders; (ii) as of the
month-end prior to the closing of the Proposed Transaction,
Heritage Oaks Bank must have an aggregate outstanding balance of
non-maturity deposits equal to at least $1.25 billion; (iii) as of
the closing of the Proposed Transaction, HEOP shall have tangible
common equity of not less than $183.0 million, subject to certain
assumptions and adjustments that are set forth in the Merger
Agreement; (iv) the receipt of all necessary regulatory approvals
for the Proposed Transaction, without the imposition of conditions
or requirements, other than conditions or requirements related to
remedial actions, that the PPBI board of directors reasonably
determines in good faith would, individually or in the aggregate,
materially reduce the economic benefits of the Proposed
Transaction; (v) the absence of any regulation, judgment, decree,
injunction or other order of a governmental authority which
prohibits the consummation of the Proposed Transaction or which
prohibits or makes illegal the consummation of the Proposed
Transaction; (vi) the effective registration of the shares of PPBI
Common Stock to be issued to HEOPs shareholders with the Securities
and Exchange Commission (the SEC) and the approval of such shares
for listing on the Nasdaq Global Market; (vii) all representations
and warranties made by PPBI and HEOP in the Merger Agreement must
remain true and correct, except for certain inaccuracies that would
not have, or would not reasonably be expected to have, a material
adverse effect; and (viii) PPBI and HEOP must have performed their
respective obligations under the Merger Agreement in all material
respects.
Termination Fee
HEOP must pay PPBI a termination fee in the amount of $15.0 million
if the Merger Agreement is terminated under certain circumstances
set forth in the Merger Agreement.
Expenses of the Proposed Transaction
Each party will bear all expenses incurred by it in connection with
the Merger Agreement and the transactions contemplated thereby.
The foregoing description of the Merger Agreement does not purport
to be complete and is qualified in its entirety by reference to the
full text of the Merger Agreement, which is attached hereto as
Exhibit 2.1 to this Current Report on Form 8-K and is incorporated
herein by reference.
The representations, warranties and covenants of each party set
forth in the Merger Agreement have been made only for purposes of,
were and are solely for the benefit of the parties to, the Merger
Agreement, may be subject to limitations agreed upon by the
contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of establishing
these matters as facts, and may be subject to standards of
materiality applicable to the contracting parties that differ from
those applicable to investors.
In addition, such representations and warranties (i) will not
survive consummation of the Proposed Transaction, and cannot be the
basis for any claims under the Merger Agreement by the other party
after termination of the Merger Agreement, except as a result of
fraud or willful breach of the provisions of the Merger Agreement,
and (ii) were made only as of the date of the Merger Agreement or
such other date as is specified in the Merger Agreement.
Information concerning the subject matter of the representations
and warranties may change after the date of the Merger Agreement,
which subsequent information may or may not be fully reflected in
the parties public
disclosures. Accordingly, the Merger Agreement is included with
this filing only to provide investors with information regarding
the terms of the Merger Agreement, and not to provide investors
with any other factual information regarding PPBI, Pacific Premier,
HEOP, Heritage Oaks Bank, or their respective affiliates or their
respective businesses.
ITEM 7.01. REGULATION FD DISCLOSURE
PPBI has prepared an investor presentation regarding the Proposed
Transaction, which it expects to use in connection with
presentations to analysts and investors. The presentation is
attached to this Current Report on Form 8-K as Exhibit 99.1 and is
incorporated herein by reference.
The preceding information, as well as Exhibit 99.1 referenced
herein, shall not be deemed filed for purposes of Section 18 of the
Securities and Exchange Act of 1934, as amended (the Exchange Act),
or otherwise subject to the liabilities of that Section, or
incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in such filing.
ITEM 8.01. OTHER EVENTS.
On December 13, 2016, PPBI and HEOP issued a joint press release
announcing the execution of the Merger Agreement. A copy of the
press release is attached as Exhibit 99.2 to this Current Report on
Form 8-K. For additional information about the Proposed
Transaction, see Item 1.01 of this Current Report on Form 8-K.
*****
Forward Looking Statements
This Current Report on Form 8-K may contain forward-looking
statements regarding PPBI, Pacific Premier, HEOP, Heritage Oaks
Bank and the Proposed Transaction. These statements involve certain
risks and uncertainties that could cause actual results to differ
materially from those in the forward- looking statements. Such
risks and uncertainties include, but are not limited to, the
following factors: the expected cost savings, synergies and other
financial benefits from the acquisition might not be realized
within the expected time frames or at all; governmental approval of
the Proposed Transaction may not be obtained or adverse regulatory
conditions may be imposed in connection with governmental approvals
of the Proposed Transaction; conditions to the closing of the
Proposed Transaction may not be satisfied; the HEOP shareholders
may fail to approve the consummation of the Proposed Transaction
and the shareholders of PPBI may not approve the issuance of PPBI
Common Stock in connection with the Proposed Transaction.
Annualized, pro forma, projected and estimated numbers in this
press release are used for illustrative purposes only, are not
forecasts and may not reflect actual results.
PPBI, Pacific Premier, HEOP and Heritage Oaks Bank undertake no
obligation to revise or publicly release any revision or update to
these forward-looking statements to reflect events or circumstances
that occur after the date on which such statements were made.
Additional Information About the Merger and Where to Find It
This Current Report on Form 8-K 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 proposed acquisition transaction, a
registration statement on Form S-4 will be filed with the SEC by
PPBI. The registration statement will contain a joint proxy
statement/prospectus to be distributed to the shareholders of HEOP
and PPBI in connection with their vote on the acquisition.
SHAREHOLDERS OF HEOP AND PPBI ARE ENCOURAGED TO READ THE
REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL
BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The final
joint proxy
statement/prospectus will be mailed to shareholders of HEOP and
PPBI. Investors and security holders will be able to obtain those
documents, and any other documents PPBI and HEOP have filed with
the SEC, free of charge at the SEC’s website, www.sec.gov. In
addition, documents filed with the SEC by PPBI and HEOP will be
available free of charge by (1) accessing PPBIs website at
www.ppbi.com under the Investor Relations link and then under the
heading SEC Filings, (2) accessing HEOPs website at
www.heritageoaksbank.com under the Investor Relations link and then
under the heading SEC Filings, (3) writing PPBI at 17901 Von Karman
Avenue, Suite 1200, Irvine, CA 92614, Attention: Investor Relations
or (4) writing HEOP at 1222 Vine Street Paso Robles, CA 93446,
Attention: Corporate Secretary.
The directors, executive officers and certain other members of
management and employees of PPBI may be deemed to be participants
in the solicitation of proxies in respect of the proposed
acquisition. Information about the directors and executive officers
of PPBI is included in the proxy statement for its 2016 annual
meeting of PPBI shareholders, which was filed with the SEC on April
27, 2016. The directors, executive officers and certain other
members of management and employees of HEOP may also be deemed to
be participants in the solicitation of proxies in favor of the
acquisition from the shareholders of HEOP. Information about the
directors and executive officers of HEOP is included in the proxy
statement for its 2016 annual meeting of HEOP shareholders, which
was filed with the SEC on April 26, 2016. Additional information
regarding the interests of those participants and other persons who
may be deemed participants in the transaction may be obtained by
reading the joint proxy statement/prospectus regarding the proposed
acquisition when it becomes available. Free copies of this document
may be obtained as described in the preceding paragraph.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit
Number
2.1
Agreement and Plan of Reorganization, dated as of December
12, 2016, by and between Pacific Premier Bancorp, Inc. and
Heritage Oaks Bancorp.
99.1
Investor Presentation, dated December 13, 2016.
99.2
Press release, dated December 13, 2016.


About PACIFIC PREMIER BANCORP, INC. (NASDAQ:PPBI)

Pacific Premier Bancorp, Inc. is a bank holding company. The Company’s subsidiary, Pacific Premier Bank (the Bank), is a California state-chartered commercial bank. The Bank’s primary focus market is small and middle market businesses. The Bank offers various deposit products and services, including checking, money market and savings accounts, cash management services, electronic banking services and online bill payment. The Bank also offers a range of loan products, such as commercial business loans, lines of credit, small business administration (SBA) loans, warehouse credit facilities, commercial real estate (CRE) loans, residential home loans, construction loans and consumer loans. The Bank primarily conducts business throughout California through a network of approximately 60 full-service depository branches. Through the United States Small Business Administration (SBA) lending unit, the Bank provides entrepreneurs and small business owners’ access to loans.

PACIFIC PREMIER BANCORP, INC. (NASDAQ:PPBI) Recent Trading Information

PACIFIC PREMIER BANCORP, INC. (NASDAQ:PPBI) closed its last trading session down -1.00 at 33.65 with 97,891 shares trading hands.

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