UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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) | June 23, 2019 |
1STCONSTITUTION BANCORP |
(Exact Name of Registrant as Specified in Charter) |
New Jersey | 000-32891 | 22-3665653 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
2650 Route 130 P.O. Box 634, Cranbury, New Jersey | 08512 |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code | (609) 655-4500 |
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 obligation of the registrant under any of the following provisions:
ý | 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)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, no par value | FCCY | NASDAQ Stock Market LLC (NASDAQ Global Select Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Item 1.01 | Entry into a Material Definitive Agreement. |
On June 23, 2019, 1st Constitution Bancorp (the “Company”) and its primary operating subsidiary, 1st Constitution Bank (the “Bank”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Shore Community Bank (“Shore”), providing for the merger of Shore with and into the Bank, with the Bank as the surviving entity (the “Merger”).
Subject to the terms and conditions of the Merger Agreement, upon consummation of the Merger, which is expected to occur in the fourth quarter of 2019, each outstanding share of common stock of Shore shall be converted into the right to receive, at the election of the holder: (i) $16.50 in cash (the “Cash Consideration”); or (ii) 0.8786 of a share (the “Exchange Ratio”) of common stock of the Company (the “Stock Consideration”); or (iii) a combination of Cash Consideration and Stock Consideration (the Cash Consideration and the Stock Consideration being referred to as, the “Merger Consideration”). Notwithstanding any such election, fifty-five percent (55%) of the total number of shares of common stock of Shore issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) shall be converted into shares of common stock of the Company, and forty-five percent (45%) of such shares shall be converted into cash, subject to adjustment as set forth in the Merger Agreement. The Stock Consideration will consist of a maximum of 1,509,348 shares of common stock of the Company, with the balance of the Merger Consideration to consist of Cash Consideration.
In addition to the foregoing, all holders of outstanding options that may be exercised for shares of common stock of Shore (each a “Stock Option” and collectively, the “Stock Options”) that are not exercised at or prior to the Effective Time will be deemed to have elected to receive Cash Consideration (only with respect to the Stock Options), reduced by the exercise price of each such Stock Option. Each share of common stock of the Company outstanding immediately prior to the Effective Time will remain outstanding and unaffected by the Merger. As a result, at the Effective Time, each Stock Option that is outstanding as of the Effective Time, whether or not then vested or exercisable, shall be cancelled, by virtue of the Merger and without any action on the part of the Company, the Bank, Shore, the holder of that Stock Option or any other person.
Under New Jersey banking law, shareholders of Shore can elect to dissent from the Merger. Any shareholder electing to dissent shall be entitled to a cash payment for his, her or its shares only to the extent permitted by and in accordance with New Jersey banking law.
The Merger Agreement contains typical representations, warranties, and covenants of the Company, the Bank and Shore, including, among others, covenants that require, during the period between the execution of the Merger Agreement and consummation of the Merger, (i) Shore to use commercially reasonable efforts to conduct its business in the ordinary course and consistent with past banking practice and prudent banking practice; and (ii) Shore to not, subject to certain exceptions generally related to the Shore Board of Directors’ evaluation and exercise of its fiduciary duties, (a) solicit proposals relating to alternative business combination transactions or (b) enter into discussions or negotiations or provide confidential information in connection with any proposals for alternative business combination transactions.
-1- |
The Merger Agreement provides certain termination rights for the Company, the Bank and Shore, including, among other things, the right for Shore to terminate the Merger Agreement if its Board of Directors determines by a vote of a majority of the members of its entire board, at any time during the five day period commencing on the day after the first date on which all bank regulatory approvals (and waivers, if applicable) necessary for the consummation of the Merger have been received and either party has notified the other in writing that all such approvals (and waivers, if applicable) have been received (the “Determination Date”), if both of the following conditions are satisfied: (i) the average of the daily closing prices of the Company’s common stock for the 20 consecutive full trading days in which such shares are quoted on the NASDAQ Global Select Market ending at the close of trading on the Determination Date (the “Purchaser Common Stock Average Price”) falls below the product of 0.80 and $18.78; and (ii) (A) the number obtained by dividing the Purchaser Common Stock Average Price by $18.78 (the “Purchaser Ratio”) is less than (B) the number obtained by dividing the reported closing value of the Nasdaq Bank Index on the day immediately preceding the Determination Date by the reported closing value of the Nasdaq Bank Index on June 21, 2019 (the “Index Ratio”), and subtracting 0.20 from such quotient.
In the event that Shore elects to exercise this termination right, it must provide prompt written notice to the Company. During the seven day period commencing with the receipt of such notice, the Company would have the option of increasing the Stock Consideration by increasing the exchange ratio to equal the lesser of: (x) a number equal to a quotient, the numerator of which is the product of $18.78 multiplied by the Exchange Ratio (as then in effect), and the denominator of which is the Purchaser Common Stock Average Price; and (y) a number equal to a quotient, the numerator of which is the product of the Index Ratio multiplied the Exchange Ratio (as then in effect), and the denominator of which is the Purchaser Ratio.
The Merger Agreement further provides that upon termination of the Merger Agreement under certain circumstances, Shore would be obligated to pay the Company a termination fee of $2,250,000, which amount includes the out-of-pocket expenses incurred by the Company and the Bank in connection with the Merger.
Completion of the Merger is subject to customary closing conditions, including, among others, (i) receipt of the requisite approval of the shareholders of Shore; (ii) receipt of regulatory approvals; (iii) the absence of any law or order prohibiting the closing; (iv) the holders of no more than 10% of Shore common stock exercising their dissenters’ rights under New Jersey banking law; and (v) the effectiveness of the registration statement to be filed by the Company with respect to the common stock to be issued in the Merger. In addition, each party’s obligation to consummate the Merger is subject to certain other conditions, including the accuracy of the representations and warranties of the other party and compliance of the other party with its covenants in all material respects.
-2- |
The Merger Agreement also contains representations and warranties that the parties have made to each other as of specific dates. Except for its status as a contractual document that establishes and governs the legal relations among the parties with respect to the Merger described therein, the Merger Agreement is not intended to be a source of factual, business or operational information about the parties. The representations and warranties contained in the Merger Agreement were made only for purposes of that agreement and as of specific dates; may be subject to a contractual standard of materiality different from what a shareholder might view as material; may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts; may have been qualified by certain disclosures not reflected in the Merger Agreement that were made to the other party in connection with the negotiation of the Merger Agreement; and generally were solely for the benefit of the parties to the Merger Agreement. Shareholders should read the Merger Agreement together with the other information concerning the Company that the Company publicly files in reports and statements with the Securities and Exchange Commission (the “Commission”).
The foregoing description of the Merger Agreement is not complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 hereto and is incorporated by reference herein.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this document regarding the proposed Merger, including the expected timetable for completing the proposed Merger and the effects of the proposed Merger, constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the rules, regulations and releases of the Commission. Such forward-looking statements include, but are not limited to, statements about the benefits of the Merger, including future financial and operating results and the Company’s or Shore’s future expectations, beliefs, goals, plans or prospects. Any statements that are not statements of historical fact, including statements containing such words as “will,” “could,” “plans,” “intends,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “anticipate,” “estimated,” or similar expressions, should also be considered forward-looking statements, although not all forward-looking statements contain these identifying words. Readers should not place undue influence on these forward-looking statements, which speak only as of the date hereof. Such statements are based upon the current beliefs and expectations of the management of the Company and Shore and are subject to significant risks and uncertainties outside of our control.
Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to, the following: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (2) the risk that Shore’s shareholders may not adopt the Merger Agreement; (3) the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated; (4) delays in closing the Merger or other risks that any of the closing conditions to the Merger may not be satisfied in a timely manner; (5) the inability to realize expected cost savings and synergies from the Merger in the amounts or in the timeframe anticipated; (6) the diversion of management’s time from ongoing business operations due to issues relating to the Merger; (7) costs or difficulties relating to integration matters might be greater than expected; (8) material adverse changes in the Company’s or Shore’s operations or earnings; (9) potential litigation in connection with the Merger; (10) a decrease in the common stock price of the Company under certain circumstances which could give Shore the right to terminate the Merger Agreement; and (11) the inability to retain Shore’s customers and employees.
-3- |
There are important, additional factors that could cause actual results or events to differ materially from those indicated by such forward looking statements, including the factors described under “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K, which was filed with the Commission on March 15, 2019. Such factors include, but are not limited to, the overall economy and the interest rate environment; the ability of customers to repay their obligations; competition; significant changes in accounting, tax or regulatory practices and requirements; certain interest rate risks; and risks associated with speculative construction lending. The Company undertakes no obligation to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Additional Information and Where to Find It
In connection with the proposed Merger, the Company intends to file a registration statement on Form S-4 with the Commission. The Company may file other documents with the Commission regarding the proposed Merger. A definitive proxy statement/prospectus will be mailed to the shareholders of Shore. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE COMMISSION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO SUCH DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the registration statement (when available), including the proxy statement/prospectus, and other documents containing information about the Company at the Commission’s website at www.sec.gov. Copies of these documents may also be obtained from the Company (when available) by directing a request to Robert F. Mangano, President and Chief Executive Officer, 1st Constitution Bancorp, at 2650 Route 130 North, P.O. Box 634, Cranbury, New Jersey 08512, telephone (609) 655-4500.
Certain Information Regarding Participants
The Company, Shore, their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies from Shore’s shareholders in respect of the proposed Merger. Information regarding the directors and executive officers of the Company may be found in its definitive proxy statement relating to its 2019 Annual Meeting of Shareholders, which was filed with the Commission on April 19, 2019 and can be obtained free of charge from the Commission’s website at www.sec.gov or from the Company by directing a request to Robert F. Mangano, President and Chief Executive Officer, 1st Constitution Bancorp, at 2650 Route 130 North, P.O. Box 634, Cranbury, New Jersey 08512, telephone (609) 655-4500. Information regarding the directors and executive officers of Shore may be found in its proxy statement relating to its 2019 Annual Meeting of Shareholders, which can be obtained free of charge from Robert T. English, President and Chief Executive Officer, Shore Community Bank, 1012 Hooper Avenue, Toms River, New Jersey 08753, telephone (732) 240-5800. 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 proxy statement/prospectus and other relevant materials to be filed with the Commission when they become available.
-4- |
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Title |
2.1 | Agreement and Plan of Merger, dated as of June 23, 2019, by and among the Company, the Bank and Shore. |
-5- |
SIGNATURES
Pursuant 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.
1ST CONSTITUTION BANCORP | ||
Date: June 24, 2019 | By: | /s/ Robert F. Mangano |
Name: Robert F. Mangano | ||
Title: President and Chief Executive Officer |
-6-