Park Sterling Corporation (NASDAQ:PSTB) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry Into a Material Definitive |
On April 26, 2017, Park Sterling Corporation (Park
Sterling) and South State Corporation, a South Carolina
corporation (South State), entered into an
Agreement and Plan of Merger (the Merger
Agreement), to which Park Sterling will merge with and
into South State (the Merger), with South State
continuing as the surviving entity in the Merger, subject to the
terms and conditions set forth therein. Immediately following the
Merger, Park Sterlings wholly owned bank subsidiary, Park
Sterling Bank, will merge with and into South States wholly owned
bank subsidiary, South State Bank (the Bank
Merger), with South State Bank as the surviving entity
in the Bank Merger. The Merger Agreement was unanimously approved
by the Board of Directors of each of Park Sterling and South
State.
Subject to the terms and conditions of the Merger Agreement, at
the effective time of the Merger (the Effective
Time), Park Sterling shareholders will have the right to
receive 0.14 shares (the Exchange Ratio) of
common stock, par value $2.50 per share, of South State
(South State Common Stock) for each share of
common stock, par value $1.00 per share, of Park Sterling
(Park Sterling Common Stock) (such amount, the
Merger Consideration).
At the Effective Time, each stock option granted by Park
Sterling, whether vested or unvested, will be cancelled and
converted into the right to receive a cash amount equal to the
product of (a) the number of shares of Park Sterling Common Stock
subject to such stock option immediately prior to the Effective
Time and (b) the excess, if any, of (i) the product of (A) the
average closing price per share for South State Common Stock for
the ten full trading days ending on the day immediately preceding
the closing date and (B) the Exchange Ratio (the Cash
Consideration Value), over (ii) the exercise price of
such option. Any stock options granted by Park Sterling with an
exercise price equal to or greater than the Cash Consideration
Value will be cancelled for no consideration. Additionally, at
the Effective Time, each award of restricted shares of Park
Sterling Common Stock will vest in full, the restrictions thereon
will lapse and each such award will be converted into the right
to receive the Merger Consideration in respect of each share of
Park Sterling Common Stock underlying such award.
The Merger Agreement also provides, among other things, that
immediately after the Effective Time, Mr. James C. Cherry and one
other current non-employee member of the board of directors of
Park Sterling agreed upon by the parties will be appointed to the
board of directors of South State.
The Merger Agreement contains customary representations and
warranties from both Park Sterling and South State, and each
party has agreed to customary covenants, including, among others,
covenants relating to the conduct of its business during the
interim period between the execution of the Merger Agreement and
the Effective Time, the obligation of each party, subject to
certain exceptions, to recommend that its shareholders approve
the Merger Agreement and the transactions contemplated therein.
Park Sterling and South State have also agreed to cooperate with
each other and to prepare and file, as promptly as possible, all
applications, notices, petitions and filings to obtain all
consents and approvals that are necessary or advisable to
consummate the transactions contemplated by the Merger Agreement.
The respective shareholders of Park Sterling and South State will
be asked to vote on the approval of the Merger Agreement at
special shareholder meetings that will be held as promptly as
practicable to applicable law and the parties governing
documents. The completion of the Merger is subject to the
approval of the Merger Agreement by the respective shareholders
of Park Sterling and South State and to other customary
conditions, including, among others, (1) the absence of any
order, injunction or other legal restraint preventing the
completion of the Merger or the other transactions contemplated
by the Merger Agreement or making the consummation of the Merger
or the other transactions contemplated by the Merger Agreement
illegal, (2) the absence of any objection by the NASDAQ Stock
Market (NASDAQ) to the listing of the shares of
South State Common Stock to be issued in the Merger, (3) the
effectiveness of the registration statement on Form S-4 for the
issuance of the shares of South State Common Stock to be issued
in connection with the Merger and (4) the receipt of required
regulatory approvals, including the approval of the Federal
Reserve Board, the Federal Deposit Insurance Corporation, and
South Carolina and North Carolina bank regulatory approvals. Each
partys obligation to complete the Merger is also subject to
certain additional customary conditions, including (1) subject to
certain exceptions, the accuracy of the representations and
warranties of the other party, (2) performance in all material
respects by the other party of its obligations under the Merger
Agreement and (3) receipt by each party of an opinion from its
counsel to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the
Code).
Park Sterling is subject to customary restrictions on its ability
to solicit third-party proposals relating to alternative
transactions or provide information or enter into discussions in
connection with alternative transactions, subject to certain
exceptions to permit Park Sterlings board of directors to comply
with its fiduciary duties. Prior to approval of the Merger
Agreement by Park Sterlings shareholders, under specified
circumstances, the board of directors of Park Sterling may change
its recommendation to the Park Sterling shareholders regarding
approval of the Merger Agreement in connection with an
unsolicited, bona fide written alternative acquisition
proposal that the board of directors of Park Sterling determines
in good faith, after consultation with its financial advisors and
outside legal counsel, constitutes a Superior Proposal (as
defined in the Merger Agreement).
The Merger Agreement contains certain termination rights for Park
Sterling and South State. Upon termination of the Merger
Agreement under specified customary circumstances, Park Sterling
or South State may be required to pay to the other party a
termination fee of $25 million. The termination fee will be
payable by Park Sterling if (i) prior to the termination of the
Agreement, there is a bona fide alternative acquisition proposal,
(ii) the Merger Agreement is terminated (A) by either party, if
the closing has not occurred by April 26, 2018 andif Park
Sterlings shareholders do not approve the Merger Agreement at
Park Sterlings special meeting of shareholders, (B) by South
State, if Park Sterling is inbreach of the Merger Agreement
andthat breach results in certain closing conditions not being
satisfied or (C) by South State, if Park Sterlings shareholders
do not approve the Merger Agreement at Park Sterlings special
meeting of shareholders, and (iii) then, in each case, within 12
months after the date of termination, Park Sterling consummates
an alternative transaction or enters into an alternative
acquisition agreement. Additionally, Park Sterling will also be
required to pay the termination fee if Park Sterlings board of
directors fails to recommend approval of the Merger Agreement,
changes its recommendation to Park Sterlings shareholders or
breaches certain other covenants contained in the Merger
Agreement. Finally, Park Sterling will be required to pay the
termination fee if Park Sterling terminates the Merger Agreement
after a failure of Park Sterlings shareholders to approve the
Merger Agreement, which is followed by Park Sterling entering
into a definitive agreement providing for a Superior Proposal
that was received by Park Sterling prior its shareholders
meeting. South State will be required to pay the termination fee
if Park Sterling terminates the Merger Agreement following a
failure by South States board of directors to recommend the
Merger Agreement to its shareholders, South States board of
directors changes its recommendation to South States shareholders
or South State breaches certain other covenants contained in the
Merger Agreement.
In addition to the foregoing termination rights, and subject to
certain limitations, either party may terminate the Merger
Agreement if the Merger is not consummated by April 26, 2018,
provided that such right to terminate shall not be
available to any party that, through breach of the Merger
Agreement, causes the failure of the consummation of the Merger
to occur by such date.
The representations, warranties and covenants of each party set
forth in the Merger Agreement have been made only for purposes
of, and 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.
Accordingly, the representations and warranties may not describe
the actual state of affairs at the date they were made or at any
other time, and investors should not rely on them as statements
of fact. In addition, such representations and warranties (1)
will not survive consummation of the Merger and (2) were made
only as of the date of the Merger Agreement or such other date as
is specified in the Merger Agreement. Moreover, information
concerning the subject matter of the representations, warranties
and covenants 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
Park Sterling or South State, their respective affiliates or
their respective businesses. The Merger Agreement should not be
read alone, but should instead be read in conjunction with the
other information regarding Park Sterling, South State, their
respective affiliates and their respective businesses, the other
documents that will be contained in, or incorporated by reference
into, the Registration Statement on Form S-4 that will include a
joint proxy statement of Park Sterling and South State and a
prospectus of South State, as well as in the Forms 10-K, Forms
10-Q and other filings that each of Park Sterling and South State
make with the Securities and Exchange Commission
(SEC).
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 and is incorporated herein by
reference.
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Item 5.02 |
Departure of Directors or Certain Officers; |
On April 26, 2017, Park Sterling and Park Sterling Bank (the
Bank) entered into an amended and restated
employment agreement (the Employment Agreement)
with Ms. Nancy J. Foster, an Executive Vice President and Park
Sterlings Chief Risk Officer, amending and restating her prior
employment agreement with the Bank dated November 15, 2010.
The Employment Agreement provides that Ms. Foster will continue
to serve as Executive Vice President and Chief Risk Officer and
will continue to receive her annual base salary of $360,000.
The Employment Agreement is for an initial term ending March 23,
2019 that automatically renews for successive one-year terms
unless either party provides 180-days advance written notice of
its intention to terminate the Employment Agreement. The
Employment Agreement provides that Ms. Foster will be eligible
for an annual bonus, will be entitled to long-term equity
compensation awards at the discretion of the Banks Compensation
and Development Committee (the Committee) and
shall have her base salary reviewed at least annually by the
Committee for adjustments. In addition, to the Employment
Agreement, Ms. Foster will be reimbursed for all reasonable
business expenses incurred in the ordinary course of business,
educational expenses related to her professional development and
membership in professional and civic organizations that are
consistent with Park Sterlings strategic objectives and approved
in advance by the Committee. The Employment Agreement also
generally permits Ms. Foster to participate in all benefits plans
and programs offered by Park Sterling.
Under the terms of the Employment Agreement, Ms. Foster is
subject to (i) a non-competition and non-solicitation covenant
during her employment and for twelve months following her last
day of employment with Park Sterling and (ii) a non-disparagement
covenant during her employment and for twenty-four months
following her last day of employment with Park Sterling. The
Employment Agreement also contains customary confidentiality,
work product and return of company property covenants.
In the event Ms. Foster is terminated without Cause or resigns
for Good Reason (as such terms are defined in the Employment
Agreement), the Employment Agreement provides for severance pay
equal to (i) two times Ms. Fosters base salary, which is payable
in equal installments over 24 months following termination of
employment, (ii) two times her highest bonus received during the
three years prior to termination, which is payable in a lump sum
within 60 day following her termination of employment, and (iii)
the monthly COBRA premium that Ms. Foster would have to pay for
continuation coverage under the Banks health plan, which is
payable for 18 months following her termination of employment.
In the event Ms. Foster is terminated without Cause, resigns for
Good Reason or the Employment Agreement expires as a result of
the buyers failure to renew its terms, each within the period
beginning with the signing of a letter of intent or similar
agreement that would result in a Change of Control (as defined in
the Employment Agreement) transaction or within twelve months
following a Change of Control, the Employment Agreement provides
the severance pay described above.
The Employment Agreement provides that Ms. Foster will repay any
compensation previously paid or made available that is subject to
recovery under applicable law or any compensation recoupment,
clawback or recovery policy adopted by Park Sterling. In
addition, the Employment Agreement provides that if payments on
termination of employment would constitute a parachute payment as
defined in Code Section 280G, such payments would be reduced to
the extent necessary so that no excise tax is imposed by Code
Section 4999, but only if, by reason of such reduction, the net
after-tax benefit received by Ms. Foster would exceed the net
after-tax benefit that she would have received if no reduction
were made.
The foregoing description of the Employment Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Employment Agreement, which is
attached hereto as Exhibit 10.1 and is incorporated herein by
reference.
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Item 8.01. |
Other Events. |
In connection with the execution of the Merger Agreement, South
State entered into a consulting agreement with Mr. Cherry, Park
Sterlings Chief Executive Officer, and entered into employment
agreements with Mr. Donald K. Truslow, Park Sterlings Chief
Financial Officer, and Mr. Bryan F. Kennedy III, Park Sterlings
President. Each such agreement will be effective on and subject
to the closing of the Merger. The employment and consulting
agreements set forth the terms and conditions of each key
executives service to South State following the closing of the
Merger and will supersede the existing employment agreements
between such executives and Park Sterling.
Simultaneous with the execution of the Merger Agreement, South
State entered into voting agreements (each, a Voting
Agreement, and collectively, the Voting
Agreements) with Park Sterlings directors and named
executive officers, in which each such person agreed, among other
things, to vote the shares of Park Sterling Common Stock owned
beneficially or of record by him or her in favor of the Merger
and against any proposal made in competition with the Merger, as
well as to certain other customary restrictions with respect to
the voting and transfer of his or her shares of Park Sterling
Common Stock. The foregoing description of the Voting Agreements
does not purport to be complete and is qualified in its entirety
by reference to the full text of the Voting Agreements, a form of
which is included as Exhibit A to the Merger Agreement attached
hereto as Exhibit 2.1 and is incorporated herein by reference.
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Cautionary Statement Regarding Forward-Looking Statements
Statements included in this communication which are not
historical in nature or do not relate to current facts are
intended to be, and are hereby identified as, forward-looking
statements for purposes of the safe harbor provided by Section
27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The words may, will, anticipate,
could, should, would, believe, contemplate, expect, estimate,
continue, plan, project and intend, as well as other similar
words and expressions of the future, are intended to identify
forward-looking statements. South State and Park Sterling caution
readers that forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ
materially from anticipated results. Such risks and
uncertainties, include, among others, the following
possibilities: the occurrence of any event, change or other
circumstances that could give rise to the right of one or both of
the parties to terminate the definitive merger agreement between
South State and Park Sterling; the outcome of any legal
proceedings that may be instituted against South State or Park
Sterling; the failure to obtain necessary regulatory approvals
(and the risk that such approvals may result in the imposition of
conditions that could adversely affect the combined company or
the expected benefits of the transaction), and shareholder
approvals or to satisfy any of the other conditions to the
transaction on a timely basis or at all; the possibility that the
anticipated benefits of the transaction are not realized when
expected or at all, including as a result of the impact of, or
problems arising from, the integration of the two companies or as
a result of the strength of the economy and competitive factors
in the areas where South State and Park Sterling do business; the
possibility that the transaction may be more expensive to
complete than anticipated, including as a result of unexpected
factors or events; diversion of managements attention from
ongoing business operations and opportunities; potential adverse
reactions or changes to business or employee relationships,
including those resulting from the announcement or completion of
the transaction; South States ability to complete the acquisition
and integration of Park Sterling successfully; changes in loan
mix, deposit mix, capital and liquidity levels, emerging
regulatory expectations and measures, net interest income,
noninterest income, noninterest expense, credit trends and
conditions, including loan losses, allowance for loan loss,
charge-offs, delinquency trends and nonperforming asset levels,
deterioration in the credit quality of the loan portfolio or the
value of collateral securing loans, deterioration in the value of
securities held for investment, the impacts of an increasing rate
environment, and other similar matters; inability to identify and
successfully negotiate and complete additional combinations with
other potential merger partners or to successfully integrate such
businesses into Park Sterling, including Park Sterlings ability
to adequately estimate or to realize the benefits and cost
savings from and limit any unexpected liabilities acquired as a
result of any such business combinations; failure to generate an
adequate return on investment related to new branches or other
hiring initiatives; inability to generate future organic growth
in loan balances, retail banking, wealth management, mortgage
banking or capital markets results through the hiring of new
personnel, development of new products, including new online and
mobile banking platforms for treasury services, opening of de
novo branches or otherwise; inability to capitalize on identified
revenue enhancements or expense management opportunities,
including the inability to achieve or maintain adjusted operating
expense to adjusted operating revenue targets; inability to
generate future ATM and card income from marketing expenses; the
effects of negative or soft economic conditions, including stress
in the commercial real estate markets or failure of continued
recovery in the residential real estate markets; changes in
consumer and investor confidence and the related impact on
financial markets and institutions; the potential impacts of any
government shutdown or debt ceiling impasse, including the risk
of a U.S. credit rating downgrade or default, or continued global
economic instability, which could cause disruptions in the
financial markets, impact interest rates, and cause other
potential unforeseen consequences; fluctuations in the market
price of the common stock, regulatory, legal and contractual
requirements, other uses of capital, financial performance,
market conditions generally, and future actions by the board of
directors, in each case impacting repurchases of common stock or
declaration of dividends; legal and regulatory developments,
including changes in the federal risk-based capital rules;
increased competition from both banks and nonbanks; changes in
accounting standards, rules and interpretations, inaccurate
estimates or assumptions in accounting, including acquisition
accounting fair market value assumptions and accounting for
purchased credit-impaired loans, and the impact on Park Sterlings
financial statements; and managements ability to effectively
manage credit risk, market risk, operational risk, legal risk,
and regulatory and compliance risk; and other factors that may
affect future results of South State and Park Sterling.
Additional factors that could cause results to differ materially
from those described above can be found in South States Annual
Report on Form 10-K for the year ended December 31, 2016, which
is on file with the Securities and Exchange Commission (the
SEC) and available in the Investor Relations section of
South States website, http://www.southstatebank.com, under the
heading SEC Filings and in other documents South State files with
the SEC, and in Park Sterlings Annual Report on Form 10-K for the
year ended December 31, 2016, which is on file with the SEC and
available on the Investor Relations page linked to Park Sterlings
website, http://www.parksterlingbank.com, under the heading
Regulatory Filings and in other documents Park Sterling files
with the SEC.
All forward-looking statements speak only as of the date they are
made and are based on information available at that time. Neither
South State nor Park Sterling assumes any obligation to update
forward-looking statements to reflect circumstances or events
that occur after the date the forward-looking statements were
made or to reflect the occurrence of unanticipated events except
as required by federal securities laws. As forward-looking
statements involve significant risks and uncertainties, caution
should be exercised against placing undue reliance on such
statements.
IMPORTANT ADDITIONAL INFORMATION
In connection with the proposed transaction between South State
and Park Sterling, South State will file with the SEC a
Registration Statement on Form S-4 that will include a Joint
Proxy Statement of South State and Park Sterling and a Prospectus
of South State, as well as other relevant documents concerning
the proposed transaction. The proposed transaction involving
South State and Park Sterling will be submitted to Park Sterlings
shareholders and South States shareholders for their
consideration. This communication shall not constitute an offer
to sell or the solicitation of an offer to buy any securities nor
shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of such
jurisdiction. Shareholders of South State and
shareholders of Park Sterling are urged to read the registration
statement and the joint proxy statement/prospectus regarding the
transaction when it becomes available and any other relevant
documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain
important information.
Shareholders will be able to obtain a free copy of the definitive
joint proxy statement/prospectus, as well as other filings
containing information about South State and Park Sterling,
without charge, at the SECs website (http://www.sec.gov). Copies
of the joint proxy statement/prospectus and the filings with the
SEC that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, by
directing a request to South State Corporation, 520 Gervais
Street, Columbia, South Carolina 29201, Attention: John C.
Pollok, Senior Executive Vice President, CFO and COO, (800)
277-2175 or to Park Sterling Corporation, 1043 E. Morehead
Street, Suite 201, Charlotte, North Carolina 28204, Attention:
Donald K. Truslow, (704) 323-4292.
Participants in THE Solicitation
South State, Park Sterling and certain of their respective
directors, executive officers and employees may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transaction. Information regarding South States
directors and executive officers is available in its definitive
proxy statement, which was filed with the SEC on March 6, 2017,
and certain of its Current Reports on Form 8-K. Information
regarding Park Sterlings directors and executive officers is
available in its definitive proxy statement, which was filed with
the SEC on April 13, 2017, and certain of its Current Reports on
Form 8-K. Other information regarding the participants in the
proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained
in the joint proxy statement/prospectus and other relevant
materials filed with the SEC. Free copies of this document may be
obtained as described in the preceding paragraph.
Item9.01. Financial Statements and
Exhibits.
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ExhibitNo. |
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ExhibitDescription |
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2.1 |
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Agreement and Plan of Merger, dated as of April 26, 2017, |
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10.1 |
Employment Agreement, dated as of April 26, 2017, among |
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to Item 601(b)(2) of Regulation S-K promulgated by the SEC, |
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.
| Date: May 1, 2017 | |||
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PARK STERLING CORPORATION |
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By: |
/s/ Donald K. Truslow |
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Donald K. Truslow |
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Chief Financial Officer |
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EXHIBIT INDEX
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ExhibitNo. |
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ExhibitDescription |
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2.1 |
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Agreement and Plan of Merger, dated as of April 26, 2017, |
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10.1 |
Employment Agreement, dated as of April 26, 2017, among |
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About Park Sterling Corporation (NASDAQ:PSTB)
Park Sterling Corporation is a holding company for Park Sterling Bank (the Bank). The Bank is a North Carolina-chartered commercial nonmember bank. The Company provides banking services to small and mid-sized businesses, real estate owners, residential builders, institutions, professionals and consumers doing business or residing within its target markets. It provides a range of banking products, including personal, non-profit checking accounts, interest on lawyer trust accounts, individual retirement accounts, business and personal money market accounts, time deposits, overdraft protection, and online and mobile banking. Its wealth management activities include investment management, private banking and investment brokerage services. Its cash management activities include remote deposit capture, lockbox services, sweep accounts and wire payments. Its capital markets activities include interest rate and currency risk management products, loan syndications and debt placements. Park Sterling Corporation (NASDAQ:PSTB) Recent Trading Information
Park Sterling Corporation (NASDAQ:PSTB) closed its last trading session down -0.01 at 12.29 with 792,101 shares trading hands.