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) September 29, 2004
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Pennsylvania Commerce Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 000-50961 25-1834776
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 Senate Avenue, Camp Hill, Pennsylvania 17011
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (717)975-5630
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N/A
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(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 (see General Instruction A.2. below):
[ ] 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))
Item 1.01. Entry into a Material Definitive Agreement.
On September 29, 2004, Pennsylvania Commerce Bancorp, Inc. ("Company")
entered into Amendment No. 2 to Network Agreement ("Amendment"), a Stock
Purchase Agreement and a Registration Rights Agreement with Commerce Bancorp,
Inc. ("Commerce of New Jersey").
a. Description of the Relationship between the Company and Commerce of
New Jersey.
As of June 30, 2004, Commerce of New Jersey owned approximately 7.9% of
the Company's common stock, 100% of the Company's non-voting Series A preferred
stock, warrants that entitle Commerce of New Jersey to purchase 143,666 shares
(adjusted for common stock dividends) of the Company's common stock upon a
"change of control" (as defined in the Warrant Agreement) of the Company and
100% of the Company's Trust Capital Securities. As of June 30, 2004, as adjusted
to include the shares purchased by Commerce of New Jersey pursuant to the Stock
Purchase Agreement described below, Commerce of New Jersey owned approximately
11.7% of the Company's common stock.
Additionally, the Bank occasionally participates in loans with Commerce
Bank, N.A., the bank subsidiary of Commerce of New Jersey. At June 30, 2004,
approximately $2.6 million of these participations were outstanding. A federal
funds line of credit was established with Commerce Bank, N.A. in the amount of
$10.0 million at a rate of interest based upon the overnight federal funds rate,
which could be drawn upon if needed. The balance at June 30, 2004 on this line
was $8.5 million.
b. Description of the Amendment
Following is a brief description of the terms of the Amendment that are
material to the Company:
Pursuant to a Network Agreement with Commerce of New Jersey ("Network
Agreement"), the Company and its subsidiary bank, Commerce Bank/Harrisburg, N.A.
("Bank"), have the right to use the "Commerce Bank" name and the "America's Most
Convenient Bank" logo, among others, within the territory prescribed by the
Network Agreement (the Pennsylvania counties of Adams, Berks, Bradford, Carbon,
Centre, Clinton, Columbia, Cumberland, Dauphin, Franklin, Fulton, Huntingdon,
Juniata, Lackawanna, Lancaster, Lebanon, Luzerne, Lycoming, Mifflin, Monroe,
Montour, Northumberland, Perry, Pike, Potter, Schuylkill, Snyder, Sullivan,
Susquehanna, Tioga, Union, Wayne, Wyoming, and York). Under the Network
Agreement, Commerce of New Jersey, through its subsidiary Commerce Bank, N.A.,
provides various services to the Bank including: maintaining the computer wide
area network; proof and encoding services; deposit account statement rendering;
data processing; and advertising support. The Bank may only use these services
in the territory prescribed by the Network Agreement. This restriction limits
the Company's growth to these areas as long as the Company and the Bank are
parties to the Network Agreement. Prior to the Amendment, the Network Agreement
had a perpetual term, but both parties could terminate the Network Agreement
without cause upon 180 days' notice. Commerce of New Jersey could also terminate
the Network Agreement upon 90 days' notice, following a breach by the Company of
its obligations under the Agreement, a change of control in the Company or
suspension of the Company's or Bank's ability to engage in the business of
banking (subject, in certain cases, to a 15-day cure period).
Pursuant to the Amendment, the term of the Network Agreement is five
years with automatic renewal and extension for additional five year periods,
subject to each party's ability to terminate on any "fifth anniversary date"
(the next "fifth anniversary date" is January 1, 2010) with 360 days prior
written notice. Additionally, Commerce of New Jersey may terminate the agreement
upon 360 days prior written notice after the occurrence of any of the following
events:
o If the Company misuses the Commerce of New Jersey system, or otherwise
materially impairs the goodwill associated with the Commerce of New
Jersey system and does not cure this misuse within 30 days of notice
from Commerce of New Jersey;
o If the Company fails to remit to Commerce of New Jersey any payments
when due and does not cure within 30 days of notice from Commerce of
New Jersey;
o If the Company fails to submit to Commerce of New Jersey certain
information required under the Network Agreement and does not cure
within 30 days of notice from Commerce of New Jersey;
o If a change in control (as defined in the Network Agreement) of the
Company or Commerce of New Jersey occurs;
o If the Company otherwise violates the terms of the Network Agreement
and does not cure the violation within 30 days of notice from Commerce
of New Jersey; and
o If the Company's authority to engage in banking is suspended or
terminated.
In addition, the Company may terminate the agreement upon 360 days prior written
notice if a change of control of Commerce of New Jersey occurs.
c. Description of the Stock Purchase and Registration Rights Agreements
Following is a brief description of the terms of the Stock Purchase and
Registration Rights Agreements that are material to the Company:
On September 29, 2004, the Company entered into and consummated a Stock
Purchase Agreement with Commerce of New Jersey. Pursuant to the Stock Purchase
Agreement, Commerce of New Jersey purchased 100,000 shares of unregistered
common stock of the Company (the "Stock") for a per share price of $45.666 and
an aggregate price of $4,566,600. Pursuant to the Stock Purchase Agreement, the
per share price was equal to the average of the closing sale prices of the
Company's common stock on the NASDAQ SmallCap Market for the five trading day
period (i.e. dates in which trades occurred) ending on September 28, 2004.
In connection with the Stock Purchase Agreement, the Company entered
into a Registration Rights Agreement with Commerce of New Jersey whereby the
Company granted Commerce of New Jersey "demand" and "piggy-back" registration
rights with respect to the Stock. Commerce of New Jersey may exercise its
"demand" right at any time from and after March 29, 2005 by providing the
Company with a written request that the Company file a registration statement
covering the Stock. Commerce of New Jersey may only exercise this "demand" right
once and this right is subject to certain exceptions. In connection with
Commerce of New Jersey's "piggy-back" rights, the Company must notify Commerce
of New Jersey in writing at least 15 days prior to the filing of any
registration statement for purposes of a public offering of any of the Company's
securities (including, but not limited to, registration statements relating to
secondary offerings of securities of the Company, but excluding the Company's
registration statement on Form S-1 filed with the SEC on August 13, 2004 (File
No. 333-118236) and any amendments thereto and registration statements relating
to employee benefit plans or with respect to corporate reorganizations or other
transactions under Rule 145 of the Securities Act) and the Company must afford
Commerce of New Jersey an opportunity to include in such registration statement
all or part of the Stock. Commerce of New Jersey's registration rights under the
Registration Rights Agreement expire if all Stock held by and issuable to
Commerce of New Jersey may be immediately sold under Rule 144 promulgated
pursuant to the Securities Act.
The foregoing descriptions are qualified in their entireties by
reference to the Network Agreement, Amendment, Stock Purchase Agreement and
Registration Rights Agreement attached hereto as Exhibits 4.1, 10.1 and 10.2,
respectively. The Audit Committee of the Company's Board of Directors has
approved each of the Agreements described herein.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under Item 1.01(c) is incorporated herein by
reference.
Issuance of the Stock to Commerce of New Jersey pursuant to the Stock
Purchase Agreement was a private placement transaction exempt from registration
under Section 4(2) of the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(c) The following exhibits are filed herewith:
4.1. Registration Rights Agreement dated as of September 29, 2004
between Pennsylvania Commerce Bancorp, Inc. and Commerce Bancorp, Inc.
10.1. Amendment No. 2 to Network Agreement by and among Commerce
Bancorp, Inc., Pennsylvania Commerce Bancorp, Inc. and Commerce Bank/Harrisburg,
N.A. dated as of September 29, 2004.
10.2. Stock Purchase Agreement dated as of September 29, 2004, between
Pennsylvania Commerce Bancorp, Inc. and Commerce Bancorp, Inc.
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.
Dated: October 1, 2004 PENNSYLVANIA COMMERCE BANCORP, INC.
By: /s/ Mark A. Zody
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Name: Mark A. Zody
Title: Chief Financial Officer