PARAGON COMMERCIAL CORPORATION (NASDAQ:PBNC) Files An 8-K Entry into a Material Definitive Agreement
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). 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.
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). 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, Paragons 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
Paragons equity plans or individual award agreements, and as
adjusted based on the Exchange Ratio.
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
Paragons 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.
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
Paragons stockholder meeting.
Securities and Exchange Commission (SEC) in connection with the
solicitation of proxies from the stockholders of Paragon for
Paragons stockholder meeting.
In connection with the execution of the Merger Agreement, all of
the Paragons directors, executive officers, and owners of 10% or
more of Paragons outstanding common stock entered into affiliate
agreements with TowneBank 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.
the Paragons directors, executive officers, and owners of 10% or
more of Paragons outstanding common stock entered into affiliate
agreements with TowneBank 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)Paragons 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)Paragons
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.
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)Paragons 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)Paragons
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.
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.
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.
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.
Paragons 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 SECs 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 Paragons website at https://www.paragonbank.com under
About UsInvestor Relations.
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 SECs 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 Paragons website at https://www.paragonbank.com under
About UsInvestor Relations.
Paragon, TowneBank and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from Paragons 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 Paragons executive officers and directors can
be found in Paragons final prospectus filed with the SEC on June
17, 2016.Additional information regarding TowneBanks executive
officers and directors can be found in TowneBanks 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 TowneBanks website
at https://townebank.com under Investor Relations. The
information on TowneBanks and Paragons 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.
officers may be deemed to be participants in the solicitation of
proxies from Paragons 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 Paragons executive officers and directors can
be found in Paragons final prospectus filed with the SEC on June
17, 2016.Additional information regarding TowneBanks executive
officers and directors can be found in TowneBanks 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 TowneBanks website
at https://townebank.com under Investor Relations. The
information on TowneBanks and Paragons 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.
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.
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.
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.
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.
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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 Corporations First Quarter 2017 Financial Results |
About PARAGON COMMERCIAL CORPORATION (NASDAQ:PBNC)
Paragon Commercial Corporation is a bank holding company for Paragon Bank (the Bank). The Bank is engaged in general commercial banking in Wake and Mecklenburg Counties, North California. The Bank offers private banking and commercial banking services. Its private banking services include deposit services, such as debit cards and safe deposit boxes. Its commercial banking services include deposit services, such as business checking, nonprofit checking and business money market; courier service; remote deposit capture; merchant services; zero balance accounts; cash vault/deposit service, and account management services, such as automated sweeps and reconciliation. It also offers mobile and online banking services. Its borrowing services include commercial loans and lines, corporate credit cards and home purchase/refinance. It also offers wealth management and investment services. PARAGON COMMERCIAL CORPORATION (NASDAQ:PBNC) Recent Trading Information
PARAGON COMMERCIAL CORPORATION (NASDAQ:PBNC) closed its last trading session down -0.44 at 54.53 with 19,975 shares trading hands.
