UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): JANUARY 24, 2005
THE BANC CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-25033 63-1201350
(Commission File Number) (IRS Employer Identification No.)
17 NORTH 20TH STREET, BIRMINGHAM, ALABAMA 35203
(Address of Principal Executive Offices) (Zip Code)
(205) 327-3600
(Registrant's Telephone Number, Including Area Code)
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 obligations 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))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On January 24, 2005, The Banc Corporation (the "Company") announced that it
had entered into a series of agreements setting forth
o The employment of C. Stanley Bailey as Chief Executive Officer and a
director of the Company and its subsidiary The Bank, C. Marvin Scott as
President of the Company and The Bank, and Rick D. Gardner as Chief
Operating Officer of the Company and the Bank;
o The purchase by Mr. Bailey, Mr. Scott and Mr. Gardner, along with other
investors, of 925,636 shares of common stock of the Company at $8.17 per
share in a private placement consummated simultaneously with the employment
of Mr. Bailey, Mr. Scott and Mr. Gardner; and
o Arrangements under which James A. Taylor would continue to serve as
non-executive Chairman of the Board of the Company and James A. Taylor, Jr.
would continue to serve as a director of the Company, but would cease to
serve as Chief Executive Officer and President, respectively, of the
Company and as officers and directors of The Bank.
See Items 3.02 and 5.02 below for additional information, including a brief
description of the terms and conditions of such agreements that are material to
the Company.
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
On January 24, 2005, in connection with the arrangements with James A.
Taylor and James A. Taylor, Jr. described under Item 1.01 above and more
particularly described under Item 5.02 below, the Employment Agreement, dated
January 1, 2002, between the Company and James A. Taylor and the Employment
Agreement, dated September 19, 2000, between the Company and James A. Taylor,
Jr. were terminated.
See Item 5.02 below for additional information, including a brief
description of the terms and conditions of such agreements that are material to
the Company.
SECTION 3 - SECURITIES AND TRADING MARKETS
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
On January 24, 2005, in connection with the agreements described in Item
1.01 above, the Company issued an aggregate of 925,636 shares of its common
stock (representing approximately 4.96% of its outstanding common stock) to the
following persons and in the following amounts at a purchase price of $8.17 per
share, the last reported sale price of the Company's common stock on the NASDAQ
National Market System on January 21, 2005:
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PURCHASER (1) NUMBER OF SHARES
------------- ----------------
C. Stanley Bailey 264,686
C. Marvin Scott 152,998
Rick D. Gardner 61,199
Duane Bickings 12,239
Forest Hill Select Fund, LP 396,266
Forest Hill Offshore, Ltd. 32,129
David Hiden 6,119
(1) In some cases, purchases were effected in whole or in part through
retirement accounts or escrow accounts for the benefit of the indicated
purchaser.
The shares were issued in a private placement for cash pursuant to the
exemptions from registration provided by Section 4(2) of the Securities Act of
1933 and Rule 506 under the Securities Act, as the shares were issued to a
limited number of investors in a transaction not involving any public offering
and were issued solely to "accredited investors", as such term is defined under
Rule 501 under the Securities Act. The Company intends to use substantially all
of the proceeds of the sale of shares to fund amounts required to be paid by the
Company in connection with the agreements described in Item 1.01 above,
including amounts payable to James A. Taylor and James A. Taylor, Jr. under the
Company's agreements with them and amounts payable with respect to professional
fees and other expenses of the transactions contemplated by such agreements.
In connection with the private placement, the Company and the investors
entered into a Stock Purchase Agreement containing customary representations,
warranties and covenants, including restrictions on transfer of the shares
purchased. In addition, the Company and the investors entered into a
Registration Rights Agreement, pursuant to which the Company agreed to effect up
to three demand registrations under the Securities Act with respect to the offer
and sale by the investors of the shares purchased by them, subject to the
satisfaction of customary conditions, and to provide unlimited "piggyback"
registrations in connection with registrations effected by the Company otherwise
than by request of any of the investors. The Registration Rights Agreement
contains customary representations, warranties and covenants of the parties,
including covenants with respect to indemnification for material misstatements
or omissions by either party in a registration statement, prospectus or other
document relating to a registration filed pursuant to the Registration Rights
Agreement. The Company's obligations under the Registration Rights Agreement
will terminate at such time as all shares purchased by the investors are
eligible for resale pursuant to Rule 144(k) under the Securities Act.
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SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
BACKGROUND
As described above, on January 24, 2005, the Company entered into a
series of agreements in order to (a) arrange for the employment of a new Chief
Executive Officer and director, and additional new members of senior management,
(b) make certain arrangements with the prior Chief Executive Officer and
President with respect to their cessation of employment as officers, with
respect to their continued services as Chairman of the Board of Directors and as
a director, respectively, and with respect to certain amounts and benefits
payable to them upon such cessation, and (c) sell shares of the Company's common
stock in a private placement to the new executives and other investors, with the
proceeds of such sale to provide a source of funding for the payment of cash
amounts due to the prior Chief Executive Officer and President. The following
sections provide information on the new members of senior management, material
terms of the Company's agreements with the new and former officers, and certain
financial impacts of the transactions contemplated by the agreements.
NEW EXECUTIVE OFFICERS
Effective immediately, the following persons have been named to the
offices with The Banc Corporation indicated below:
NAME AGE ALL POSITIONS WITH THE COMPANY (1)
---- --- ----------------------------------
C. Stanley Bailey 55 Chief Executive Officer and Director
C. Marvin Scott 55 President
Rick D. Gardner 45 Chief Operating Officer
Duane Bickings 53 Chief Credit Officer
(1) Each of Messrs. Bailey, Scott and Gardner has also been named to the
identical position with The Bank. Mr. Bailey will serve as Chairman of the
Board of The Bank, and Mr. Scott and Mr. Gardner will serve as directors of
The Bank. Each of Mr. Scott and Mr. Gardner will be appointed as a director
of the Company effective on or before December 31, 2005, if then permitted
by the NASDAQ Stock Market Marketplace Rules, or, if not so permitted on or
before December 31, 2005, then as soon thereafter as is permitted by the
NASDAQ Stock Market Marketplace Rules.
Mr. Bailey was founder, chairman and chief executive officer of
Superior Financial Corp., Little Rock, Arkansas, a financial services company
that was the parent company of Superior Bank, from late 1997 until the sale of
the company in October 2003. From 1995 until 1997, he was Executive Vice
President of Hancock Holding Company, Gulfport, Mississippi, a bank holding
company. From 1971 until 1994, he held various positions with AmSouth
Bancorporation, Birmingham, Alabama, serving most recently as vice chairman and
a director.
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Mr. Scott served as President and Chief Operating Officer of Superior
Financial Corp. from April 1998 through October 2003. From February 1996 until
January 1998, he was Chief Retail Officer and Senior Vice President of Hancock
Holding Company, and he was previously Executive Vice President - Consumer
Banking at AmSouth Bank.
Mr. Gardner was an officer of Superior Financial Corp. from October
1998 through October 2003, serving as Chief Administrative Officer and,
previously, as Chief Financial Officer. From April 1996 until September 1998, he
was Chief Financial Officer and then Chief Executive Officer of First Commercial
Mortgage Company, Little Rock, Arkansas. He previously served as Chief Financial
Officer of Metmor Financial, Kansas City, Missouri, and as an accountant with
Grant Thornton. Mr. Gardner is a Certified Public Accountant.
Mr. Bickings served as Chief Credit Officer of Superior Financial Corp.
from 2001 through October 2003. He held various positions with Bank of America
and predecessors from 1979 until 2001. He has served as a consultant to The Banc
Corporation during 2004 and early 2005.
Employment Agreements
Mr. Bailey. Mr. Bailey and the Company have entered into an Employment
Agreement, dated January 24, 2005, under which the Company has agreed to employ
Mr. Bailey as Chief Executive Officer of the Company and The Bank for a term
expiring January 31, 2008. The Employment Agreement automatically renews for
successive one-year extensions on each anniversary of the commencement of the
term unless either party gives the other 30 days' prior written notice of
nonrenewal. Under the Employment Agreement, Mr. Bailey is entitled to an initial
base salary at the annual rate of $400,000 per year and to an annual target
bonus of 50% of his base salary, subject to the achievement of agreed-upon
performance goals. Mr. Bailey is also entitled to participate in other bonus or
long-term incentive plans applicable to similarly situated executive officers,
and to participate in such insurance, medical and other employee benefit plans
as may be provided to such executive officers. The Company is also required to
provide Mr. Bailey with certain other benefits, including a term life insurance
policy in the amount of at least $1 million, an automobile and customary
automobile-related benefits, and initiation fees, dues and assessments for
approved club memberships, and to pay certain relocation expenses. The agreement
restricts Mr. Bailey's ability to engage in various activities competitive with
the Company's business for one year after Mr. Bailey ceases to be employed by
the Company.
If Mr. Bailey's employment is terminated other than for Cause (as
defined) or as a result of his death or disability, or if Mr. Bailey terminates
the agreement as a result of certain adverse changes in his functions, duties or
responsibilities or of another material breach by the Company of its
obligations, Mr. Bailey is entitled to continued compensation at the
then-current rate (including bonus compensation) for the then-remaining term of
the agreement, provided that Mr. Bailey may elect to receive such payment in a
lump sum discounted to present value using a 6% discount rate, and to the
continuation of other benefits during such remaining term. If Mr. Bailey's
employment is terminated as a result of his disability, he is entitled to
continued compensation at his then-current rate (including bonus compensation)
and the continuation of other benefits for one year. If Mr. Bailey's employment
by the Company is terminated within two years following a Change in Control (as
defined), other than for Cause or as a result of his death, disability or
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retirement, or if Mr. Bailey terminates such employment following the occurrence
of specified events within two years after a Change in Control, Mr. Bailey will
be entitled to receive a lump sum payment equal to three times the sum of (i)
his then-current base salary plus (ii) the target bonus he would have been
entitled to receive, and he will be entitled to receive other benefits specified
in the agreement. In addition, he will be entitled to a gross-up payment equal
to the amount of any excise taxes imposed upon him as a result of such payments
upon termination following a Change in Control.
The agreement obligates the Company to appoint Mr. Bailey to the Board
of Directors of the Company, and further provides that Mr. Bailey will be
appointed as Chairman of the Board of the Company at such time, if any, as James
A. Taylor ceases to serve as Chairman of the Board. Mr. Bailey was appointed to
the Board of Directors as of January 24, 2005, with an initial term expiring in
2006.
Mr. Scott and Mr. Gardner. Mr. Scott and Mr. Gardner have entered into
employment agreements with the Company and the Bank providing for terms
substantially identical to those described above with respect to Mr. Bailey,
except that (a) Mr. Scott's initial annual base salary is $300,000 and Mr.
Gardner's initial annual base salary is $250,000; (b) the Company is obligated
to provide term life insurance policies to Mr. Scott in the amount of $750,000
and to Mr. Gardner in the amount of $600,000; and (c) each of Mr. Scott and Mr.
Gardner will be appointed as a director of the Company effective on or before
December 31, 2005, if then permitted by the NASDAQ Stock Market Marketplace
Rules, or, if not so permitted on or before December 31, 2005, then as soon
thereafter as is permitted by the NASDAQ Stock Market Marketplace Rules.
Stock Option Grants. Under their respective employment agreements, the
Company is obligated to grant, and has granted as of January 24, 2005, options
to acquire 711,970 shares of common stock to Mr. Bailey, 355,985 shares to Mr.
Scott, and 355,985 shares to Mr. Gardner, each at an exercise price of $8.17 per
share. Such options have a ten-year term. Such options vest and become
exercisable as follows:
o 50% on April 24, 2005;
o 20% on the later of (x) the date on which the average closing price
per share of the Company's common stock over a 15-consecutive-
trading-day period (the "Market Value price") is at least $10 but
less than $12, and (y) June 29, 2005 (the "Alternate Vesting Date");
o 15% on the later of (x) the date on which the Market Value price is at
least $12 but less than $14, and (y) the Alternate Vesting Date; and
o 15% on the later of (x) the date on which the Market Value price is at
least $14, and (y) the Alternate Vesting Date.
o To the extent not otherwise vested, on January 24, 2010.
If an executive's employment is terminated for any reason other than
(i) voluntarily by the executive (other than after a Change in Control) or (i)
by the Company with Cause, (a) the portion of such options that becomes vested
on April 24, 2005 will immediately vest, to the extent not previously vested,
(b) if the Alternate Vesting Date has not occurred but any Market
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Value price has been reached, the shares that would vest upon attainment of such
Market Value price will be immediately vested notwithstanding that the Alternate
Vesting Date has not yet occurred, and (c) vesting will continue through any
remaining term of the employment agreement in accordance with its terms.
Mr. Bickings. The Company has not entered into a formal employment
agreement or similar arrangement with Mr. Bickings at this time.
Equity Investment
As described under Item 3.02 above, each of Mr. Bailey, Mr. Scott, Mr.
Gardner and Mr. Bickings has purchased shares of the Company's common stock in a
private placement at a purchase price of $8.17 per share.
ARRANGEMENTS WITH JAMES A. TAYLOR AND JAMES A. TAYLOR, JR.
The Company was a party to an Employment Agreement, dated January 1,
2002, with James A. Taylor, formerly Chairman of the Board and Chief Executive
Officer of the Company, and an Employment Agreement, dated September 19, 2000,
with James A. Taylor, Jr., formerly President and Chief Operating Officer of the
Company. These agreements are described in the Company's previous filings with
the Securities and Exchange Commission, including the Company's Proxy Statement
in connection with its 2004 Annual Meeting of Stockholders. Under these
agreements, the transactions described above triggered various obligations of
the Company to Mr. Taylor and Mr. Taylor, Jr. In order to resolve certain issues
that arose in the construction of provisions of the agreements and to facilitate
the equity investment and management transition described above, Mr. Taylor and
Mr. Taylor, Jr. engaged in discussions with a committee of independent directors
appointed by the Company's Board of Directors and, after such discussions,
entered into new agreements with the Company which supersede the obligations of
the Company under their employment agreements and which provide for payments to
Mr. Taylor of a lesser amount over a longer period of time than would have been
provided for under his employment agreement. Material terms of the new
agreements are described below.
Agreement with James A. Taylor. The Company's employment agreement with
Mr. Taylor entitled him to certain payments based on his current compensation
upon the occurrence of specified circumstances, and gave him the option to
demand the discounted present value of such payments in a lump sum. The
transactions described above would have triggered the Company's obligations to
make such payments to Mr. Taylor. On January 24, 2005, the Company entered into
an agreement with Mr. Taylor that provides that, in lieu of the payments to
which he would have been entitled under his employment agreement, the Company
will pay to Mr. Taylor $3,940,154.90 on January 24, 2005, $3,152,123.92 on
January 24, 2006, and $788,030.98 on January 24, 2007. The agreement also
provides for the provision of certain insurance benefits to Mr. Taylor, the
transfer of a "key man" life insurance policy to Mr. Taylor, and the maintenance
of such policy by the Company for five years (with the cost of maintaining such
policy included in the above amounts), in each case substantially as required by
his employment agreement. The Company's obligation to provide such payments and
benefits to Mr. Taylor is absolute and will survive the death or disability of
Mr. Taylor.
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The agreement provides for various covenants by Mr. Taylor that were
not contained in his employment agreement, including an agreement that Mr.
Taylor will not engage in specified activities that are or could be competitive
with the business of the Company or The Bank so long as he is receiving any
benefits under the agreement or providing services to the Company or the Bank,
as a director, consultant, employee or otherwise, and an agreement that he will
not sell any shares of the Company's common stock or other securities of the
Company for a year without the prior written consent of the Company. The
agreement also contains customary covenants by Mr. Taylor concerning
noninterference, nonsolicitation and nondisparagement. Mr. Taylor is permitted
to be a passive investor (a) owning up to 5% of publicly traded entities which
may be competitors of the Company or The Bank and (b) owning up to 10% of any
bank(s) in which James A. Taylor, Jr. acts in an executive capacity, in each
case without relinquishing his position as Chairman and a director of the
Company.
Mr. Taylor will continue to serve as non-executive Chairman of the
Board of the Company.
Agreement with James A. Taylor, Jr. The Company's employment agreement
with Mr. Taylor, Jr. entitled him to certain payments based on his current
compensation upon the occurrence of specified circumstances, and gave him the
option to demand the discounted present value of such payments in a lump sum.
The transactions described above would have triggered the Company's obligations
to make such payments to Mr. Taylor, Jr. On January 24, 2005, the Company
entered into an agreement with Mr. Taylor, Jr. that provides that, in lieu of
the payments to which he would have been entitled under his employment
agreement, the Company will pay to Mr. Taylor, Jr., $1,382,872.17 on January 24,
2005. The agreement also provides for the provision of certain insurance
benefits to Mr. Taylor, Jr. and for the immediate vesting of his unvested
incentive awards and deferred compensation in each case substantially as
required by his employment agreement. The Company's obligation to provide such
payments and benefits to Mr. Taylor, Jr. is absolute and will survive the death
or disability of Mr. Taylor.
The agreement provides for various covenants by Mr. Taylor, Jr. that
were not contained in his employment agreement, including an agreement that Mr.
Taylor, Jr. will not engage in specified activities that are or could be
competitive with the business of the Company or The Bank so long as he is
receiving any benefits under the agreement or providing services to the Company
or the Bank, as a director, consultant, employee or otherwise, and an agreement
that he will not sell any shares of the Company's common stock or other
securities of the Company for a year without the prior written consent of the
Company. The agreement also contains customary covenants by Mr. Taylor, Jr.
concerning noninterference, nonsolicitation and nondisparagement. Mr. Taylor,
Jr. is permitted to be a passive investor owning up to 5% of publicly traded
entities which may be competitors of the Company or The Bank.
Mr. Taylor, Jr. will continue to serve as a director of the Company.
The agreement acknowledges that Mr. Taylor, Jr. may in the future serve as an
investor, director and officer of a de novo bank or bank(s) in certain specified
areas, and provides that he must resign as a director of the Company immediately
upon initiating any such undertaking.
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Funding of Obligations. The new equity investment described in Items
1.01 and 3.02 above, which will involve gross proceeds of over $7.5 million to
the Company, will be adequate to allow the Company to fulfill its cash payment
obligations, net of tax effect, to Mr. Taylor and Mr. Taylor, Jr., and to pay
certain other costs of the transactions described in this report. Accordingly,
the Company believes that such transactions will have substantially no effect on
the regulatory capital position of the Company and The Bank. In connection with
the transaction, the Company expects to recognize after-tax expenses of
approximately $7.9 million in the first quarter of 2005.
SECTION 7 - REGULATION FD
ITEM 7.01. REGULATION FD DISCLOSURE.
On January 24, 2005, the Company issued a press release which is
attached to this Current Report on Form 8-K as Exhibit 99 and which announced
the agreements and transactions described in this report. This information is
furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be
"filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to the liabilities of that Section, unless we specifically
incorporate it by reference in a document filed under the Securities Act of
1933 or the Securities Exchange Act of 1934. By filing this report on Form 8-K
and furnishing this information, we make no admission as to the materiality of
any information in this report that is required to be disclosed solely by reason
of Regulation FD.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit 4-1 Stock Purchase Agreement, dated January 24,
2005, between The Banc Corporation and the
investors named therein.
Exhibit 4-2 Registration Rights Agreement, dated January
24, 2005, between The Banc Corporation and the
investors named therein.
Exhibit 10-1 Employment Agreement, dated January 1, 2002,
by and between The Banc Corporation and James A.
Taylor, filed as Exhibit (10)-1 to The Banc
Corporation's Quarterly Report on Form 10-Q for
quarter ended March 31, 2002, is hereby
incorporated herein by reference.
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Exhibit 10-2 Employment Agreement, dated September 19, 2000, by
and between The Banc Corporation, The Bank and
James A. Taylor, Jr., filed as Exhibit (10)-8 to
The Banc Corporation's Annual Report on Form 10-K
for the year ended December 31, 2001, is hereby
incorporated herein by reference.
Exhibit 10-3 Agreement, dated January 24, 2005, between The
Banc Corporation and James A. Taylor, Sr.
Exhibit 10-4 Agreement, dated January 24, 2005, between The
Banc Corporation and James A. Taylor, Jr.
Exhibit 10-5 Employment Agreement, dated January 24, 2005, by
and between The Banc Corporation, The Bank and C.
Stanley Bailey.
Exhibit 10-6 Employment Agreement, dated January 24, 2005, by
and between The Banc Corporation, The Bank and C.
Marvin Scott.
Exhibit 10-7 Employment Agreement, dated January 24, 2005, by
and between The Banc Corporation, The Bank and
Rick D. Gardner.
Exhibit 99 Press Release of The Banc Corporation issued
January 24, 2005.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
THE BANC CORPORATION
Date: January 24, 2005 By: /s/ F. Hampton McFadden, Jr.
------------------------------------
F. Hampton McFadden, Jr.
Executive Vice President,
General Counsel and Secretary
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