Filing Details

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Schedule 13D/A

(Rule 13d-101)

Information to be Included in Statements Filed Pursuant to § 240.13d-1(a) and Amendments Thereto Filed

Pursuant to § 240.13d-2(a)

Under the Securities Exchange Act of 1934

(Amendment No. 18)*

 

 

Republic First Bancorp, Inc.

(Name of Issuer)

 

 

Common Stock, par value $0.01 per share

(Title of Class of Securities)

760416107

(CUSIP Number)

 

 

George E. Norcross, III

350 Royal Palm Way, Suite 500

Palm Beach, Florida 33480

(561) 500-4600

With a Copy to:

H. Rodgin Cohen

Mitchell S. Eitel

Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

212-558-4000

 

 

(Name, address and telephone number of person authorized to receive notices and communications)

July 7, 2022

(Date of Event which Requires Filing of this Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box  ☐.

 

 

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

 

 

 

*	The remainder of this cover page shall be filled out for a reporting persons initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934 (Act) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

CUSIP No. 760416107		SCHEDULE 13D		Page 3 of 18

 

1		Names of Reporting Persons     George E. Norcross, III
2		Check the Appropriate Box If a Member of a Group (See Instructions)   a.  ☒        b.  ☐
3		SEC Use Only
4		Source of Funds (See Instructions)     PF
5		Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ☐
6		Citizenship or Place of Organization     United States of America

Number of Shares  Beneficially  Owned By Each Reporting Person With				7		Sole Voting Power     674,572
				8		Shared Voting Power     0
				9		Sole Dispositive Power     674,572
				10		Shared Dispositive Power     0

11		Aggregate Amount Beneficially Owned by Each Reporting Person     674,572(1)
12		Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)     ☐
13		Percent of Class Represented By Amount in Row (11)     1.1%(2)
14		Type of Reporting Person (See Instructions)     IN

 

(1)

The Reporting Person is reporting on this Schedule 13D as a member of a group with the other Reporting Persons. The group beneficially owns 6,311,618 shares of Common Stock owned by all of the Reporting Persons in the aggregate, representing approximately 9.9% of the outstanding shares of Common Stock. See Item 5.

(2)	For purposes of calculating beneficial ownership percentages in this statement on Schedule 13D, the total number of shares of Common Stock outstanding as of June 15, 2022 is 63,753,722, as reported in the Issuers Information Statement, filed with the SEC on June 17, 2022.

CUSIP No. 760416107		SCHEDULE 13D		Page 4 of 18

 

1		Names of Reporting Persons     Avery Conner Capital Trust
2		Check the Appropriate Box If a Member of a Group (See Instructions)   a.  ☒        b.  ☐
3		SEC Use Only
4		Source of Funds (See Instructions)     AF, WC
5		Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ☐
6		Citizenship or Place of Organization     Florida

Number of Shares  Beneficially  Owned By Each Reporting Person With				7		Sole Voting Power     0
				8		Shared Voting Power     4,724,662(3)
				9		Sole Dispositive Power     0
				10		Shared Dispositive Power     4,724,662(3)

11		Aggregate Amount Beneficially Owned by Each Reporting Person     4,724,662(1)
12		Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)     ☐
13		Percent of Class Represented By Amount in Row (11)     7.4%(2)
14		Type of Reporting Person (See Instructions)     OO

 

(3)	4,724,662 shares of Common Stock held by the Avery Conner Capital Trust, of which Philip A. Norcross, Susan D. Hudson, Geoffrey B. Hudson and Rose M. Guida serve as Trustees and may be deemed to have shared beneficial ownership as Trustees.

CUSIP No. 760416107		SCHEDULE 13D		Page 5 of 18

 

1		Names of Reporting Persons     Philip A. Norcross
2		Check the Appropriate Box If a Member of a Group (See Instructions)   a.  ☒        b.  ☐
3		SEC Use Only
4		Source of Funds (See Instructions)     PF, OO See Item 3
5		Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ☐
6		Citizenship or Place of Organization     United States of America

Number of Shares  Beneficially  Owned By Each Reporting Person With				7		Sole Voting Power     450,000
				8		Shared Voting Power     4,724,662(3)
				9		Sole Dispositive Power     450,000
				10		Shared Dispositive Power     4,724,662(3)

11		Aggregate Amount Beneficially Owned by Each Reporting Person     5,174,662(1),(3)
12		Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)     ☐
13		Percent of Class Represented By Amount in Row (11)     8.1%(2)
14		Type of Reporting Person (See Instructions)     IN

 

CUSIP No. 760416107		SCHEDULE 13D		Page 6 of 18

 

1		Names of Reporting Persons     Susan D. Hudson, in her capacity as a Trustee
2		Check the Appropriate Box If a Member of a Group (See Instructions)   a.  ☒        b.  ☐
3		SEC Use Only
4		Source of Funds (See Instructions)      OO See Item 3
5		Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ☐
6		Citizenship or Place of Organization     United States of America

Number of Shares  Beneficially  Owned By Each Reporting Person With				7		Sole Voting Power     0
				8		Shared Voting Power     4,724,662(3)
				9		Sole Dispositive Power     0
				10		Shared Dispositive Power     4,724,662(3)

11		Aggregate Amount Beneficially Owned by Each Reporting Person     4,724,662(1), (3)
12		Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)     ☐
13		Percent of Class Represented By Amount in Row (11)     7.4%(2)
14		Type of Reporting Person (See Instructions)     IN

 

CUSIP No. 760416107		SCHEDULE 13D		Page 7 of 18

 

1		Names of Reporting Persons     Geoffrey B. Hudson, in his capacity as a Trustee
2		Check the Appropriate Box If a Member of a Group (See Instructions)   a.  ☒        b.  ☐
3		SEC Use Only
4		Source of Funds (See Instructions)     OO See Item 3
5		Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ☐
6		Citizenship or Place of Organization     United States of America

Number of Shares  Beneficially  Owned By Each Reporting Person With				7		Sole Voting Power     0
				8		Shared Voting Power     4,724,662(3)
				9		Sole Dispositive Power     0
				10		Shared Dispositive Power     4,724,662(3)

11		Aggregate Amount Beneficially Owned by Each Reporting Person     4,724,662(1), (3)
12		Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)     ☐
13		Percent of Class Represented By Amount in Row (11)     7.4%(2)
14		Type of Reporting Person (See Instructions)     IN

 

 

CUSIP No. 760416107		SCHEDULE 13D		Page 8 of 18

 

1		Names of Reporting Persons     Rose M. Guida, in her capacity as a Trustee
2		Check the Appropriate Box If a Member of a Group (See Instructions)   a.  ☒        b.  ☐
3		SEC Use Only
4		Source of Funds (See Instructions)     OO See Item 3
5		Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ☐
6		Citizenship or Place of Organization     United States of America

Number of Shares  Beneficially  Owned By Each Reporting Person With				7		Sole Voting Power     0
				8		Shared Voting Power     4,724,662(3)
				9		Sole Dispositive Power     0
				10		Shared Dispositive Power     4,724,662(3)

11		Aggregate Amount Beneficially Owned by Each Reporting Person     4,724,662(1), (3)
12		Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)     ☐
13		Percent of Class Represented By Amount in Row (11)     7.4%(2)
14		Type of Reporting Person (See Instructions)     IN

 

CUSIP No. 760416107		SCHEDULE 13D/A		Page 9 of 18

 

1		Names of Reporting Persons     Gregory B. Braca
2		Check the Appropriate Box If a Member of a Group (See Instructions)   a.  ☒        b.  ☐
3		SEC Use Only
4		Source of Funds (See Instructions)     PF
5		Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ☐
6		Citizenship or Place of Organization     United States of America

Number of Shares  Beneficially  Owned By Each Reporting Person With				7		Sole Voting Power     462,384
				8		Shared Voting Power     0
				9		Sole Dispositive Power     462,384
				10		Shared Dispositive Power     0

11		Aggregate Amount Beneficially Owned by Each Reporting Person     462,384(1)
12		Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)     ☐
13		Percent of Class Represented By Amount in Row (11)     0.7%(2)
14		Type of Reporting Person (See Instructions)     IN

CUSIP No. 760416107		SCHEDULE 13D/A		Page 10 of 22

 

This Amendment No. 18 (Amendment No. 18) amends the statement on Schedule 13D filed with the Securities and Exchange Commission (the SEC) on January 31, 2022, as amended prior to the date of this Amendment No. 18 (the Original Schedule 13D) as specifically set forth herein (as so amended, the Schedule 13D). Except as provided herein, each Item of the Original Schedule 13D remains unchanged.

 

Item 3.

Source and Amount of Funds or Other Consideration.

Item 3 of the Original Schedule 13D is hereby amended to add the following:

From June 17 until June 30, as set forth in Schedule A, the Avery Conner Capital Trust acquired 197,478 shares of Common Stock through a broker on the open market for a total of approximately $791,704.13. The source of funds for such purchases was trust funds.

From June 24 until June 30, as set forth in Schedule A, Philip A. Norcross acquired 22,690 shares of Common Stock through a broker on the open market for a total of approximately $90,466.24. The source of funds for such purchases was personal funds.

 

Item 4.

Purpose of the Transaction.

Item 4 of the Original Schedule 13D is hereby amended to add the following immediately prior to the last paragraph of this item:

On July 7, 2022, the Group delivered a letter to the Board, the text of which is set forth below:

Dear Directors,

We write to you again as holders of nearly 10% of the voting common stock of Republic First Bancorp, Inc. (Company).

In our June 10, 2022 letter (June letter), a copy of which is attached for your convenience, we set forth a number of critical issues confronting the Company and urged you to take action as soon as possible following a final judicial determination with respect to the pending litigation involving the Company and other stakeholders. Yesterday, we have all received that final decision. We applaud your efforts in this regard and are pleased the courts have validated your prior actions. As a result, there is no longer any impediment to us immediately commencing the constructive process of moving the Company forward. We, therefore, again today reiterate our request to immediately meet with the Board to discuss the items set forth in our June letter, as there is lots of work in front of us and too much time has already passed.

Pending that meeting, we would also immediately request the Board to grant us permission to increase our ownership position above 10%. This substantial investment (subject to regulatory approval, which we are prepared to commence immediately) would reflect our continued commitment to the Company and its future. We have, despite repeated requests in the past, never received a response from the Board on this important request. Now that all obstacles to engagement are behind us (including a voluntary dismissal of all our litigation), we would be appreciative of a prompt response.

We have in the past repeatedly asked the Board for active engagement for the betterment of the shareholders, its customers, depositors and other stakeholders. In each case, we were either ignored or stonewalled at the behest of Mr. Hill and his allies who controlled the Board at that time. Today, all of those impediments are gone and there is no reason for the Board to not actively engage us and meet. We ask this not only for the betterment of the Company and its shareholders, but also in the furtherance of your fiduciary duties.

CUSIP No. 760416107		SCHEDULE 13D/A		Page 11 of 18

 

Finally, now that the pending litigation and governance issues have been adjudicated and resolved, we ask for you to consider immediately pursuing all appropriate claims against Mr. Hill and his allies (Mr. Spevak and Mr. Tierney) for any improper conduct they or any parties associated with them may have taken with respect to the Company or its operations. All responsible parties must be held accountable as we expect the Board, in compliance with your fiduciary obligations, to vigorously pursue these matters, as we intend to do so as well.

We ask that you immediately distribute a copy of this letter to each member of the Board, and look forward to hearing from you in the very near future.

 

Also on July 7, 2022, the Group delivered a demand letter to the Board, the text of which is set forth below:

Dear Board of Directors:

George E. Norcross, III, Gregory B. Braca, and Philip A. Norcross (the Shareholders) submit this letter in their capacity as current shareholders of Republic First Bancorp, Inc. (Republic First or the Company). One of the Shareholders has been a shareholder of the Company continuously since November 16, 2021 (and the others have been shareholders continuously since at least January 26, 2022). Attached as Schedule I is evidence of the Shareholders continuous ownership of shares of the Companys common stock from November 16, 2021 to the present.

As the Shareholders advised the Board in their letter of earlier today, we believe the Board should pursue all appropriate claims against Vernon W. Hill, II (Hill) and his allies (Barry Spevak (Spevak) and Brian Tierney (Tierney)) for improper conduct they or any parties associated with them may have taken with respect to the Company or its operations. This letter is a formal derivative demand providing more detail supporting that request.

Pursuant to Pennsylvania law, the Shareholders write to demand that the Companys Board of Directors (the Board) appoint a special committee of independent, disinterested parties (an SLC) with full corporate authority to investigate and, if appropriate, take action to remedy breaches of fiduciary duty, corporate waste, unjust enrichment and other misconduct committed by certain current directors of the Company, namely Hill, Tierney, and Spevak, together with all other officers and employees of the Company who participated in the misconduct described below (the Culpable Parties).¹ The SLC should bring claims and assert all appropriate causes of action on behalf of the Company against the Culpable Parties for the reasons discussed more fully below.

 

1	Hill, Tierney and Spevak will be referred to collectively herein as the Culpable Directors.

CUSIP No. 760416107		SCHEDULE 13D/A		Page 12 of 18

 

I.	Factual Background Giving Rise to Claims Against the Culpable Parties

 

A.

The Background of the Company

Republic First is a corporation, incorporated under the laws of the Commonwealth of Pennsylvania in 1987, with its principal executive offices located in Two Liberty Place, in Philadelphia, Pennsylvania. Republic First is the holding company for Republic Bank, which operates through offices and branches in Philadelphia, Bucks, Delaware, and Montgomery Counties in Pennsylvania; Atlantic, Burlington, Camden, and Gloucester Counties in New Jersey; and New York County in New York.

 

B.	The Concerned Directors Alert Shareholders to Improper Conduct by the Culpable Directors

As the Board is well aware, on March 4, 2022, four of its members (namely, Harry Madonna, Andrew B. Cohen, Lisa Jacobs and Harris Wildsteincollectively, the Concerned Directors) issued a press release (the Press Release) in which they warned shareholders that the other members of the Board namely, the Culpable Directors and the late Theodore Flocco were not independent and were engaged in efforts to entrench Hill and to cause the Company to pursue related party transactions for the benefit of Hill and management aligned with him. The Culpable Directors have fiduciary duties to the Company, not to Hill.

On March 15, 2022, the Shareholders sent a demand to the Board asking that the conduct described in the Press Release (and potentially other undisclosed related party transactions) be investigated and remedied by an SLC. (A copy of the prior demand is enclosed as Exhibit B). The Board never responded to that demand and never advised the Shareholders of the appointment of an SLC or the identity of its members as required by Pennsylvania law (15 Pa. C.S. § 1783). The Shareholders recognize that much of the conduct identified in the Press Release may be the subject of the investigation being conducted by Wilmer Cutler Pickering Hale and Dorr (Wilmer Hale) at the behest of the Companys auditors, but the audit committee (particularly at the time the investigation began) was not independent and disinterested and could not appoint an SLC under the standards articulated by Pennsylvania statute. Further, to the Shareholders knowledge, Wilmer Hale attorneys were not empowered to act as an SLC by the Board. Thus, while the results of the Wilmer Hale investigation may be useful to the Board or an SLC, they will not resolve the prior demand (or this one). The Shareholders reiterate their prior demand and reserve the right to bring a derivative case immediately due to the Boards failure to act on that demand within a reasonable time.

 

C.	Self-Dealing Transactions by the Culpable Directors

Since the Concerned Directors Press Release, additional information has come to light regarding misconduct by the Culpable Directors. While the Press Release referenced related party agreements with Hills wifes design firm, InterArch, and agreements obligating the Company to incur certain expenses for new or expanding branches, the Concerned Directors elaborated on the misconduct in connection with the federal court action filed by the Culpable Directors in their improper efforts to extend the Board stalemate after Mr. Floccos death (discussed in more detail below).

In particular, in a brief they filed in the federal court action on May 23, 2022, the Concerned Directors explained that Hill had manipulated proper governance procedures to obtain approval for an amendment of the Companys agreement with InterArch so that InterArchs fees would be based on a percentage of construction costs, rather than a flat fee. As the Concerned Directors noted, this change incentivized waste and at least [doubled] the fees the Company would pay to Ms. Hill. Shockingly, to ensure this proposed amendment would obtain approval

CUSIP No. 760416107		SCHEDULE 13D/A		Page 13 of 18

 

(knowing that the Concerned Directors would not agree), Hill presented the proposal to the bank subsidiarys board (which he had stacked with bank employees who reported to him) rather than the Company Board. In that same filing, the Concerned Directors also revealed that Hill employed a similar tactic to secure approval of a branch expansion in Broomall, Pennsylvania. In direct violation of Board resolutions and ignoring the objections of the Concerned Directors, Hill proceeded with the branch expansion at exorbitant costs to the Company.

An SLC should investigate these additional breaches of fiduciary duties, unjust enrichment and waste of corporate assets. Moreover, an SLC should investigate and determine whether the Culpable Directors or other Culpable Parties have engaged in other improper conduct in breach of their fiduciary duties to the Company, including the failure of Culpable Parties to address and correct earlier misconduct that continues to harm the Company.

Indeed, the self-dealing identified in the Press Release and the federal court filings is far from the first time the Culpable Parties have caused the Company to engage in related party transactions that unjustly enriched Hill, his family and friends, and themselves to the detriment of Republic First. Since Hills involvement with the Company in 2008, Republic Firsts SEC filings show that the Company has funneled over $5.3 million to InterArch and approximately $880,000 to director Tierneys company for purported communications services. There is no legitimate business reason for engaging in such blatant self-dealing and related party transactions. Where the Company could obtain the same services from unrelated third parties, there is simply no reasonable justification to enrich corporate insiders.

Furthermore, based on Hills past history and these recent revelations, an SLC must investigate whether Culpable Parties, including the Culpable Directors, have authorized other related party transactions that have not been disclosed or approved by independent Board members. For instance, over the last several decades, Hill has been actively engaged in innumerable business and other partnership arrangements with John P. Silvestri and affiliated companies and individuals. Hills relationship with Mr. Silvestri continues to this day as Hill identifies his address in official Company and SEC regulatory filings as the same address as Mr. Silvestri and his organization. It is also well documented that Hill, Mr. Silvestri and their related organizations and entities over the years have profited in the tens of millions of dollars through both reported and unreported related-party transactions with other banks in which Hill was involved. Those transactions related to, among other things, real estate commissions on land sales and leasing, title agency fees and commissions, lease transactions and similar matters. Notably, many of those related-party transactions were not disclosed and, in fact, only reported after regulatory officials and others made inquiries. The Concerned Directors reference to [a]greements obligating the incurrence of expenses related to the opening of new branches and the renovation of existing branches in the Press Release reinforces the concern that the Culpable Directors and other Culpable Parties authorized or engaged in similar undisclosed self-dealing and related party transactions at Republic First.

Indeed, Mr. Silvestri, in opposing discovery by the Shareholders in a recent state court proceeding, admitted as much. On May 6, 2022, Mr. Silvestris company Interstate Commercial Real Estate (ICRE) filed a motion to quash a subpoena issued by the Shareholders. In the brief supporting that motion, ICRE disclosed that it develops real estate parcels for many different retail chains and franchise operators, including Republic Bank.The brief further revealed that over the last fifteen (15) years, Republic Bank has requested ICREs services . . . when the Bank needed to identify available real estate in areas where it wanted to place a new bank branch. ICRE would then present Republic Bank with several options, and after the Bank made its selection, ICRE would secure the sale or lease of the desired location. ICRE contended that it was paid a commission by the counter-party to any such transaction rather than Republic Bank, presumably as justification for the Companys failure to disclose the existence of these related party transactions. These related party transactions may further explain Hills motive for insisting on an expansion strategy despite

CUSIP No. 760416107		SCHEDULE 13D/A		Page 14 of 18

 

the clear evidence that the Companys financial performance suffered as a result. Hill has been more concerned with providing his wife and business partner with fees from related party transactions tied to new branches and expansion projects than with the success of the Company and the interests of its shareholders.

As the Board should be well aware, in November 2008, Hill entered into a Consent Order with the Office of the Comptroller of the Currency (OCC) in connection with his related party transactions while at Commerce Bank. The OCC Consent Order precludes Hill from engaging in similar related party transactions at other FDIC insured banks absent compliance with certain specific procedures (including Board approval and a fairness opinion from an outside auditing firm). Hills actions at the Company appear to violate the terms of the OCC Consent Order and could subject the Company to intensified regulatory scrutiny or even penalties or litigation. This too should be part of the SLCs investigation and any violation of the Consent Order would constitute further breaches of duty owed by Hill to the Company.

An SLC should also thoroughly investigate whether any Culpable Parties have caused or authorized (or if Hill or any other Culpable Parties have engaged in, with or without Board approval) any other related-party transactions, including with entities or individuals with any connection to any of the Culpable Directors, their siblings, spouses, children, other relatives (whether by blood, marriage or otherwise), friends or business associates (including Mr. Silvestri). Potential transactions could include loans or extensions of credit on non-standard terms, any contracts for services, leases, appraisal work, construction, design or development services, real estate commissions on land sales and leasing, title agency fees and commissions, or the payment of any compensation, fees, commissions or remuneration of any kind, to Hill, Tierney or Spevak or any of their family members, friends or business associates, including InterArch, Site Development, ICRE, Tierney Communications, Brian Communications, Real Time Media, Glassboro Properties LLC, or SDI Commercial Real Estate LLC.

Again, the disclosed (and particularly any undisclosed) self-dealing and related party transactions have caused and will continue to cause financial harm to the Company in the form of actual payments, as well as substantial reputational injuries and other irreparable harms, including potentially increased regulatory scrutiny or action and non-disclosure claims. Any failure to investigate fully and independently these matters and rectify prior self-dealing or conflicted transactions will constitute yet further breaches of fiduciary duty owed to the Company.

 

D.

Gross Mismanagement and Other Misconduct by Hill

In addition to the other misconduct identified above, Hill has caused Republic First to engage in a series of reckless business dealings that have caused substantial harm to the Company, likely for his own improper and self-interested motives. As stated above, despite worsening financial performance, Hill continued on his branch expansion plans undaunted, resulting in payments to his wifes and business partners firms and potentially other direct financial benefits to himself while harming Republic Firsts financial outlook and shareholder value. Hill also adopted a disastrous program of purchasing bonds, as a result of which the Companys securities portfolio, which constitutes almost 50% of its assets, now has a mark-to-market hit of approximately $200 million on a pre-tax basis (including both the available for sale and held to maturity portfolios) according to the most recent regulatory filing. This bond program has caused the Companys already weak capital ratios to decline even further and is of great concern to all shareholders and likely regulators. Hills focus on high cost deposits, coupled with negative loan growth and a strategy of chasing duration in a bond portfolio with rates about to rise, constituted gross incompetence if not intentional bad faith. His singular focus on retail branches (1) lacks the balance of a more modern operating model that leverages digital capabilities, (2) has led to high operating expenses and (3) put significant pressure on earnings. As we have previously noted, the Company has some of the weakest operating margins and capital ratios in the industry, with return

CUSIP No. 760416107		SCHEDULE 13D/A		Page 15 of 18

 

on assets, return on equity and efficiency ratios all substantially below and, and in some cases, less than half its peers. All of the above is a direct result of Hills failure to exercise his fiduciary duties on behalf of the Company, instead favoring himself, his family and friends.

Hill and the other Culpable Directors also refused to respond to multiple proposals to inject much needed capital into the Company advanced by the Shareholders. Indeed, Hill refused to even meet with the Shareholders despite their substantial stake in and clear concern for the best interests of the Company. Hills actions were likely based on personal animus for the Shareholders and a desire to preserve his own position, rather than the best interests of the Company, constituting another breach of his fiduciary duties.

It also seems that Hill may be acting as a group with the other Culpable Directors and Mr. Silvestri to entrench himself and fend off the proxy contest and shareholder calls for his removal as CEO. Hill, Tierney and Spevak together have over 10% of the Companys shares and Mr. Silvestri likely has still more (including possibly preferred shares from the Companys August 2020 offering). Based on the same reasoning advanced by the Culpable Directors in their federal court complaint against the Concerned Directors, the Culpable Directors are acting as a group and are in violation of federal securities laws for their failure to file a Schedule 13 and for making false statements disputing the Concerned Directors Press Release. In addition, the Culpable Directors and Mr. Silvestri acting as a group violates the limitations in the Companys articles of incorporation and state banking regulations prohibiting persons from exceeding 10% ownership absent Board and regulatory approvals. The SLC should investigate and, if Hill, the Culpable Directors and/or Mr. Silvestri are acting as a group, bring any appropriate claims against them and take any other appropriate action to redress the violations, including acting on behalf of the Board to enforce Article XII of the Articles of Incorporation by (i) terminat[ing] all voting rights attributable to the Holdings of such shareholder during the time that [the ownership limitation] is being violated; (ii) commenc[ing] litigation to require divestiture of such amount of the Holdings so that after such divestiture the shareholder would no longer be in violation of the restriction . . .; or (iii) tak[ing] such other action as is appropriate under the circumstances.

The Culpable Directors mismanagement and other misconduct has also set off a wave of other adverse consequences for the Company. Republic Firsts auditors demanded that the Company engage independent counsel to investigate potential misconduct. The Company was forced to delay filing its annual report on Form 10-K (and at least one quarterly report on Form 10-Q). The Company has received several notices from Nasdaq that it is in violation of Nasdaqs rules and risks delisting for failure to file its required financial reports. All of these consequences have harmed the Company, including its reputation and standing in the investment community and possibly its relationship with bank regulators and the SEC. The Culpable Directors are directly to blame for the dire consequences the Company is facing (and the substantial expense it has been forced to incur) as a result of their breaches of fiduciary duties.

 

E.

Misconduct by the Culpable Directors in Opposing the Concerned Directors

Finally, after Mr. Floccos death, the Culpable Directors engaged in still further misconduct harmful to Republic First. Despite the significant issues the Company was facing requiring Board attention, the Culpable Directors refused to attend properly noticed Board meetings in an effort to prevent the Concerned Directors from filling Mr. Floccos vacant Board seat. In so doing, the Culpable Directors placed their own self-interest ahead of the Company. They prevented the Board from engaging in the proper business of the Company at a critical time when an audit committee investigation was underway, the Company had not filed its required Form 10-K or 10-Q, was facing potential de-listing by Nasdaq (and needed to appoint a new director to the audit committee to regain compliance with one Nasdaq rule) and two groups of shareholders were engaged in a proxy contest. The Culpable Directors went further, initiating unsupported litigation in federal court, and advocating for an improper interpretation of the Companys governing documents in an effort to

CUSIP No. 760416107		SCHEDULE 13D/A		Page 16 of 18

 

prevent the Concerned Directors from gaining a decisive majority on the Board. The lawsuit prevented the Board from conducting the proper business of the Company, caused all Board members to incur legal fees and costs (for which they will likely seek indemnification from the Company) and caused the Company to incur the expense of preparing for a special meeting to elect a director to fill Mr. Floccos seat at the direction of a court-appointed custodian. This also created significant confusion for the Companys shareholders and the investing public generally.

As the Third Circuit just ruled, the interpretation of the Companys bylaws advanced by the Culpable Directors was clearly wrong. Instead, Article II Section 7 of the bylaws is unambiguous. If a vacancy on the Board arises from the death of a director, the majority of the remaining directors must fill that vacancy, regardless of whether they form a quorum. Based on that clear language, the four [Concerned] Directors, who constituted a majority of the seven remaining directors, had the power and in fact the obligation to fill the vacancy left by Mr. Floccos death. That was exactly what the Concerned Directors were attempting to do before the Culpable Directors filed suit. No provision of the bylaws or articles permitted the minority of the Board to stop that process by refusing to attend Board meetings. As the Third Circuit explained in rejecting the Culpable Directors argument, a legal board meeting requires a quorum unless the bylaws provide otherwise and in Republic Firsts case the Bylaws plainly do provide otherwise allowing less than a quorum to fill a Board vacancy. The Culpable Directors efforts to argue otherwise were without any foundation in the governing documents of Republic First.

An SLC should investigate the Culpable Directors misconduct in preventing the Board from performing its duties after Mr. Floccos death for their own selfish interests and bring action against the Culpable Directors for their breaches of their fiduciary duties of care and loyalty, resulting in significant financial and reputational harm to Republic First.

 

II.	Demand Pursuant to Pennsylvania Law

Based on the above information, the Shareholders contend that the Culpable Parties have breached and are continuing to breach their fiduciary duties to the Company, including by engaging in self-dealing transactions and committing corporate waste for the purpose of entrenching Hill and the other Culpable Directors and enriching insiders at the expense of the Company. As a result of the breaches of fiduciary duty, the Company has sustained and will continue to sustain significant damages.

Accordingly, pursuant to Pennsylvania law, the Shareholders hereby demand that the Board: (i) appoint an SLC to undertake an independent investigation into the Culpable Parties breaches of fiduciary duty, self-dealing, unjust enrichment and waste and any other violations of Pennsylvania and/or federal law; and (ii) commence a civil action against all of the Culpable Parties to recover for the benefit of the Company the damages sustained by the Company as a result of the misconduct addressed herein.

Pursuant to Pennsylvania law, if within a reasonable time after receipt of this letter, the Board has not appointed an SLC and commenced an action as demanded herein, the Shareholders will be entitled to commence a shareholders derivative action on behalf of the Company seeking appropriate relief.

Sincerely,

/s/ George E. Norcross, III

George E. Norcross, III

/s/ Gregory Braca

Gregory Braca

/s/ Philip A. Norcross

Philip A. Norcross

CUSIP No. 760416107		SCHEDULE 13D/A		Page 18 of 18

 

Item 5.

Interest in Securities of the Issuer.

Items 5(a) through 5(c) of the Original Schedule 13D are hereby amended and restated as follows:

(a) The Reporting Persons may be deemed to beneficially own 6,311,618 shares of Common Stock or approximately 9.9% of the outstanding shares of Common Stock, which percentage was calculated based upon 63,753,722 shares of Common Stock outstanding as of June 15, 2022 as reported in the Issuers Information Statement, filed with the SEC on June 17, 2022. Specifically, each Reporting Person beneficially owns such number of shares of Common Stock and such percentage of the outstanding Common Stock as reflected on Items 11 and 13 of the applicable cover page to this Statement.

(b) Each Reporting Person has the sole or shared power to vote or direct the vote and sole or shared power to dispose or to direct the disposition the number of shares of Common Stock reflected on Items 7-10 of the applicable cover page to this Statement.

(c) Except as set forth on Schedule A attached hereto, none of the Reporting Persons has engaged in transactions in shares of Common Stock (or securities convertible into, exercisable for or exchangeable for Common Stock) since the filing of the Original Schedule 13D.

CUSIP No. 760416107		SCHEDULE 13D/A		Page 19 of 18

 

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date: July 7, 2022

 

CUSIP No. 760416107		SCHEDULE 13D/A		Page 20 of 18

 

SCHEDULE A

Transactions in the Common Stock of the Issuer Since the Filing of the Original Schedule 13D

The following table sets forth all the transactions in the Common Stock of the Issuer effected since the filing of the Original Schedule 13D by the Reporting Persons. Except as otherwise noted, all such transactions were effected in the open market through brokers.

Philip A. Norcross

 

Trade Date		Shares Purchased (Sold)		Price Per Share ($)
6/17/2022(1)		160,356		4.010
6/24/2022(1)		36,219		4.008
6/24/2022		20,052		4.000
6/30/2022(1)		903		3.894
6/30/2022		2,638		3.891

Avery Conner Capital Trust

 

Trade Date		Shares Purchased (Sold)		Price Per Share ($)
6/17/2022(1)		160,356		4.010
6/24/2022(1)		36,219		4.008
6/30/2022(1)		903		3.894

Susan D. Hudson

 

Trade Date		Shares Purchased (Sold)		Price Per Share ($)
6/17/2022(1)		160,356		4.010
6/24/2022(1)		36,219		4.008
6/30/2022(1)		903		3.894

Geoffrey B. Hudson

 

Trade Date		Shares Purchased (Sold)		Price Per Share ($)
6/17/2022(1)		160,356		4.010
6/24/2022(1)		36,219		4.008
6/30/2022(1)		903		3.894

Rose M. Guida

 

Trade Date		Shares Purchased (Sold)		Price Per Share ($)
6/17/2022(1)		160,356		4.010
6/24/2022(1)		36,219		4.008
6/30/2022(1)		903		3.894