This
statement is being filed jointly, pursuant to a joint filing agreement filed
herewith as Exhibit 1, by:
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(i) Vernon
W. Hill, II. The business address of Mr. Hill is 17000 Horizon
Way, Suite 100, Mt. Laurel, NJ 08054. Mr. Hill is an investor
in various companies and business ventures. He is the founder and
former Chairman of Commerce Bancorp.
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(ii) Theodore
J. Flocco, Jr. The residence address of Mr. Flocco is 11
Brookwood Road, Mt. Laurel, NJ 08054. Mr. Flocco is a retired
former partner of Ernst & Young LLP, an independent registered public
accounting firm. Mr. Flocco currently serves as a director of the
Issuer.
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During
the last five years, neither Mr. Hill nor Mr. Flocco (together, the "Reporting
Persons") has (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, U.S. federal or state securities laws or finding any violation with respect
to such laws.
Item
3. Source and Amount of Funds or Other Consideration
As
of the date hereof, the Reporting Persons beneficially own an aggregate of 7,800
convertible trust preferred securities (the "Trust Preferred Securities"), which
are convertible, subject to certain conditions, into an aggregate of 960,000
shares of Common Stock. The aggregate purchase price for the Trust
Preferred Securities was $6,240,000 (exclusive of fees and expenses), which
amount has come from the personal funds of the Reporting Persons.
Item
4. Purpose of Transaction.
(a)-(j) On
June 10, 2008, the Issuer, through a newly formed Delaware
statutory
trust, Republic First Capital Trust IV (the "Trust"),
issued $10.8 million of the Trust Preferred Securities in a private placement
transaction to five investors including Harry D. Madonna, Chairman and Chief
Executive Officer of the Issuer; the Reporting Persons; and two other
individuals (such other individuals, the "Other Investors"). The
Trust Preferred Securities have a 30-year term with a fixed interest rate of
8.00% and are convertible into Common Stock at the option of the holders at a
conversion price of $6.50 (i) at any time on or after the last day of any
calendar quarter beginning with the quarter ending on June 30, 2008, if, as of
such last day of such calendar quarter, the closing sale price of the Common
Stock for at least 20
trading
days in a period of 30 consecutive trading days ending on the last trading day
of such calendar quarter is more than 110% of the conversion price in effect on
the last day of such calendar quarter, (ii) upon a change of control of the
Issuer, (iii) at any time after June 30, 2009, and (iv) on the business day
immediately preceding the date of repayment of such Trust Preferred Securities,
whether at stated maturity or upon redemption.
The
Reporting Persons acquired the Trust Preferred Securities pursuant to a Purchase
Agreement, dated as of June 10, 2008 (the "Purchase Agreement"), between the
Issuer, the Trust, The Harry D. Madonna Family Trust, the Reporting Persons and
the Other Investors. The Purchase Agreement is filed herewith as Exhibit 2, and
the description of the Purchase Agreement contained herein is qualified in its
entirety by reference to such Exhibit 2, which is incorporated herein by
reference.
In
connection with the acquisition of the Trust Preferred Securities, the Issuer
and Mr. Hill entered into a Consulting Agreement, dated as of June 10, 2008 (the
"Consulting Agreement"), for a term of four years, pursuant to which the Issuer
will pay to Mr. Hill a fee of $250,000 per year in consideration for Mr. Hill's
providing advisory and consulting services with respect to strategic matters and
opportunities regarding the Issuer and its business and
operations. Such services may include advice regarding (i) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Issuer or any of its subsidiaries or (ii) a sale or
transfer of a material amount of assets of the Issuer or any of its
subsidiaries. In addition, pursuant to the Consulting Agreement, Mr.
Hill has the right to designate one nominee for election to the Board of
Directors of the Issuer and Republic First Bank (the "Bank"), a wholly owned
subsidiary of the Issuer, subject to the director qualification standards of
each of the Issuer and the Bank. Pursuant to this right, Mr. Hill has
designated Mr. Flocco as his nominee, and Mr. Flocco has been appointed as a
director of the Issuer.
The
Consulting Agreement provides for termination by the Issuer with cause (as
defined therein) and termination by Mr. Hill for any reason upon 10 days advance
notice; a covenant by Mr. Hill during the term of the Consulting Agreement not
to serve in any management or consulting role with any bank or savings
institution headquartered in New York, New Jersey or Pennsylvania, subject to
exceptions and limitations; non-solicitation by Mr. Hill of customers and
employees of the Issuer and the Bank during the term of the Consulting Agreement
and for six months following an early termination of the Consulting Agreement;
and, during the term of the Consulting Agreement and for so long as Mr. Hill's
designee serves on the Board of Directors, commitments by Mr. Hill: (i) to vote
in favor of Issuer proposals regarding ratification of the Issuer's auditors and
election of the Issuer's nominees to its Board of Directors; (ii) not to,
directly or indirectly, seek additional representation on the Board of Directors
or certain committees or executive offices of the Issuer or the Bank, (iii) not
to propose a director in opposition to the Issuer's or the Bank's nominees, (iv)
not to support, initiate or participate in any proxy contest against the Issuer
or the Bank, (v) not to aid in the preparation of publicity concerning the
Issuer or the Bank without prior approval of the Issuer, unless required by law,
(vi) not to participate in any litigation seeking to effect or facilitate a
change in control of the Issuer, (vii) not to seek to amend the charter or
bylaws of the Issuer or the Bank, (viii) not to acquire beneficial ownership of
10.0% or more of the outstanding Common Stock of the Issuer and (ix) not to aid
any of his affiliates to do any of the foregoing.
The
Consulting Agreement is filed herewith as Exhibit 3, and the description of the
Consulting Agreement contained herein is qualified in its entirety by reference
to such Exhibit 3, which is incorporated herein by reference.
Except
as set forth in this Schedule 13D, none of the Reporting Persons have any plans
or proposals which relate to or which would result in any of the actions
specified in subparagraphs (a) through (j) of Item 4 of Schedule
13D.
The
Reporting Persons acquired and continue to hold the Trust Preferred Securities
reported herein for investment purposes. In this connection, the
Reporting Persons expect to evaluate on an
ongoing
basis their investment in the Issuer, and may from time to time in the future,
subject to applicable legal and contractual restrictions and constraints,
acquire shares of Common Stock, dispose of shares of Common Stock or the Trust
Preferred Securities or formulate other plans or proposals regarding the
securities of the Issuer, including the Trust Preferred Securities held by
the Reporting Persons, to the extent deemed advisable in light of market
conditions and other factors. Any such acquisitions or dispositions
may be made, subject to applicable law, in open market or privately negotiated
transactions or otherwise.
Item
5. Interest in Securities of the Issuer.
(a)−(b)
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Number
of Shares of Common Stock with Sole Voting and Dispositive
Power
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Number
of Shares of Common Stock with Shared Voting and Dispositive
Power
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Aggregate
Number of Shares of Common Stock Beneficially Owned
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Percentage
of Class Beneficially Owned
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Vernon
W. Hill, II
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923,077
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0
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923,077
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7.8%
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Theodore
J. Flocco, Jr.
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36,923
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0
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36,923
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0.3%
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By
virtue of their relationship, the Reporting Persons may be deemed to be a
"group," which "group" may be deemed to beneficially own an aggregate of 960,000
shares of Common Stock, representing 8.1% of the outstanding shares of Common
Stock.
The
percentages used herein are based on 12,011,747 share of Common Stock
outstanding, which represents the sum of (a) 960,000 shares of Common Stock into
which the Trust Preferred Securities of the Reporting Person may be converted
and (b) 10,811,747 shares of Common Stock reported to be issued and outstanding
as of April 30, 2008 by the Issuer in its Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2008, filed with the Securities and Exchange
Commission on May 1, 2008.
(c) Except
as described in this Schedule 13D, there have been no transactions in the shares
of Common Stock effected by the Reporting Persons during the last 60
days.
(d) Not
applicable.
(e) Not
applicable.
Item
6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Pursuant
to the Purchase Agreement, the Reporting Persons purchased an aggregate of 6,240
Trust Preferred Securities, each of which is convertible at the option of the
holder, subject to certain conditions, into 153.8462 shares of Common Stock
(subject to adjustment).
In
connection with the Purchase Agreement, the Issuer, The Harry D. Madonna Family
Trust, the Reporting Persons and the Other Investors entered into a Registration
Rights Agreement, dated June 10, 2008 (the "Registration Rights Agreement"),
pursuant to which The Harry D. Madonna Trust, the Reporting Persons and the
Other Investors may require the Issuer to register shares of Common Stock into
which the Trust Preferred Securities are converted (the "Registrable
Securities"), subject to certain conditions. Under the Registration
Rights Agreement, the holders of 40 percent or more of the Registrable
Securities may
request
that the Issuer file a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), covering the Registrable Securities (1) once
per 12-month period beginning from and after June 10, 2009 and (2) any time
after the Issuer's market capitalization exceeds $500 million. If the
Issuer receives such a request in writing, the Issuer shall (i) within 15 days
of the receipt thereof, give written notice of such request to all holders of
Registrable Securities and (ii) use commercially reasonable efforts to effect,
as soon as practicable after receipt of such request, registration under the
Securities Act of all of the Registrable Securities requested to be registered
(and, in the case of a request at any time after the Issuer's market
capitalization exceeds $500 million, file a "shelf" registration pursuant to
Rule 415 under the Securities Act), subject to certain limitations, within 30
days of the mailing of such notice by the Issuer. The Registration
Rights Agreement also provides The Harry D. Madonna Family Trust, the Reporting
Persons and the Other Investors with piggyback registration rights with respect
to such Registrable Securities in the event the Issuer proposes to register any
of its shares of Common Stock or other securities under the Securities Act of
1933, as amended, in connection with an offering of such securities, subject to
certain exceptions and limitations.
The
information in this Item 6 is qualified in its entirety by the information set
forth under Items 3, 4 and 5 and the Purchase Agreement, Consulting Agreement
and Registration Rights Agreement set forth in Exhibits 2, 3 and 4,
respectively, which Items and Exhibits are incorporated herein by
reference.
Item
7. Material to be Filed as Exhibits.
Exhibit
Number
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Description
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1
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Joint
Filing Agreement dated as of June 20, 2008 between Vernon W. Hill, II and
Theodore J. Flocco, Jr.
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2
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Purchase
Agreement, dated as of June 10, 2008, between Republic First Bancorp,
Inc., Republic First Bancorp Capital Trust IV, Vernon W. Hill, II, The
Harry D. Madonna Family Trust, Stephen M. Lewis, John P. Silvestri and
Theodore J. Flocco, Jr.
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3
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Consulting
Agreement, dated as of June 10, 2008, between Republic First Bancorp, Inc.
and Vernon W. Hill, II
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4
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Registration
Rights Agreement, dated as of June 10, 2008, Republic First Bancorp, Inc.,
Vernon W. Hill, II, The Harry D. Madonna Family Trust, Stephen M. Lewis,
John P. Silvestri and Theodore J. Flocco,
Jr.
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After reasonable inquiry and to the
best of the knowledge and belief of the undersigned, the undersigned certifies
that the information set forth herein is true, complete and
correct.
Dated:
June 20, 2008
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/s/
Vernon W. Hill, II
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Vernon
W. Hill, II
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/s/
Theodore J. Flocco, Jr.
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Theodore
J. Flocco, Jr.
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