Sun Bancorp, Inc. (NASDAQ:SNBC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01.
Agreement and Plan of Merger
On June30, 2017, Sun Bancorp, Inc. (Sun), the parent company of
Sun National Bank, entered into an Agreement and Plan of Merger
(the Merger Agreement) with OceanFirst Financial Corp.
(OceanFirst), the parent company of OceanFirst Bank, and Mercury
Merger Sub Corp. (Merger Sub), a wholly-owned subsidiary of
OceanFirst. to the terms and subject to the conditions of the
Merger Agreement, Merger Sub will merge (the First-Step Merger)
with and into Sun, with Sun as the surviving entity, and
immediately following the effective time of the First-Step
Merger, Sun will merge with and into OceanFirst, with OceanFirst
as the surviving entity (together with the First-Step Merger, the
Integrated Mergers). It is anticipated that immediately following
the consummation of the Integrated Mergers, Sun National Bank
will merge with and into OceanFirst Bank, with OceanFirst Bank as
the surviving bank (together with the Integrated Mergers, the
Transaction).
The Merger Agreement has been unanimously approved by the boards
of directors of each of Sun and OceanFirst. Subject to the
approval of the Merger Agreement by Suns shareholders in
accordance with the New Jersey Business Corporations Act, the
approval of the issuance of the Stock Consideration (as defined
below) by OceanFirsts stockholders, as required by applicable
NASDAQ rules, the receipt of all required regulatory approvals
and the fulfillment of other customary closing conditions, the
parties anticipate that the Transaction will close early in the
first quarter of 2018.
On the terms and subject to the conditions set forth in the
Merger Agreement, at the effective time of the First-Step Merger,
each share of Sun common stock, par value $5.00 per share (Sun
Common Stock), issued and outstanding, other than shares of Sun
Common Stock held by OceanFirst or Sun, will be converted into
the right to receive either:
(i) |
an amount in cash (the Cash Consideration) equal to the sum of (A) $3.78 plus (B)the product of 0.7884 multiplied by the volume-weighted average trading price of shares of common stock, par value $0.01 per share, of OceanFirst (the OceanFirst Common Stock) for the five trading days immediately prior to the day on which the First-Step Merger occurs (the OceanFirst Share Closing Price); or |
(ii) |
a number of shares of OceanFirst Common Stock equal to the quotient of (A)the Cash Consideration divided by (B)the OceanFirst Share Closing Price (such quotient, the Exchange Ratio and such number of shares, the Stock Consideration, and together with the Cash Consideration, the Merger Consideration), |
in each case at the election of the holder of such share of Sun
Common Stock, subject to the allocation and proration provisions
of the Merger Agreement. The aggregate amount of Cash
Consideration will not exceed the product of (x) $3.78 and (y)the
total number of shares of Sun Common Stock issued and outstanding
immediately prior to the effective time of the First-Step Merger.
Additionally, each outstanding and unexercised option to purchase
Sun Common Stock will convert into an option to purchase from
OceanFirst a number of shares of OceanFirst Common Stock (rounded
down to the nearest whole share) determined by multiplying (i)the
number of shares of Sun Common Stock subject to such Sun stock
option immediately prior to the effective time of the First-Step
Merger by (ii)the Exchange Ratio; and the exercise price per
share of the new option will be equal to the quotient obtained by
dividing (a)the per share exercise price for the shares of Sun
Common Stock subject to such Sun stock option by (b)the Exchange
Ratio (rounded up to the nearest whole cent). Each outstanding
Sun restricted stock award will vest at the effective time of the
First-Step Merger and will convert into the right to receive the
Merger Consideration with respect to each share of Sun Common
Stock subject thereto. Each outstanding Sun restricted stock unit
award will be cancelled at the effective time of the First-Step
Merger, and the holders thereof shall receive the Merger
Consideration with respect to each share of Sun Common Stock
subject thereto.
to the terms of the Merger Agreement, two current members of the
board of directors of Sun will be appointed to the boards of
directors of OceanFirst and OceanFirst Bank at the effective time
of the First-Step Merger.
The Merger Agreement contains customary representations and
warranties from both Sun and OceanFirst, each with respect to its
and its subsidiaries businesses. Each party has also agreed to
customary covenants, including, among others, covenants relating
to the conduct of its business during the interim period between
the execution of the Merger Agreement and the effective time of
the First-Step Merger and each partys obligation to call a
meeting of its shareholders to adopt and approve the Merger
Agreement, in the case of Sun, and to approve the issuance of the
shares of OceanFirst Common Stock in connection with the
First-Step Merger, in the case of OceanFirst. Subject to certain
exceptions, Sun has agreed to recommend
that its shareholders adopt and approve the Merger Agreement and
OceanFirst has agreed to recommend that its stockholders approve
the issuance of shares of OceanFirst Common Stock in connection
with the First-Step Merger. In addition, Sun has agreed that,
subject to certain exceptions, it will not, and will cause its
subsidiaries and their representatives not to, solicit, initiate
or knowingly encourage or knowingly facilitate (including by
providing non-public information) any inquiries or proposals with
respect to any other acquisition proposals. The Merger Agreement
provides certain termination rights for each of OceanFirst and
Sun, and further provides that if the Merger Agreement is
terminated under certain circumstances, Sun or OceanFirst, as
applicable, will be obligated to pay the other party a
termination fee equal to $17.045million.
As described above, the consummation of the Integrated Mergers is
subject to customary closing conditions, including (i)receipt of
the requisite approvals of the Sun shareholders and the
OceanFirst stockholders, (ii)receipt of all required regulatory
approvals, (iii)the absence of any law or order prohibiting the
closing, (iv)the effectiveness of the registration statement to
be filed by OceanFirst with the Securities and Exchange
Commission (the SEC) with respect to the OceanFirst Common Stock
to be issued in the First-Step Merger and (v)authorization for
listing on the NASDAQ Global Select Market of the shares of
OceanFirst Common Stock to be issued in the First-Step Merger. In
addition, each partys obligation to consummate the Integrated
Mergers is subject to certain other customary conditions,
including (a)the accuracy of the representations and warranties
of the other party, subject to certain materiality standards,
(b)compliance in all material respects by the other party with
its covenants and (c)receipt by such party of an opinion from
such partys counsel to the effect that the Integrated Mergers
will qualify as a reorganization within the meaning of
Section368(a) of the Internal Revenue Code of 1986, as amended.
The Merger Agreement includes customary representations,
warranties and covenants of Sun and OceanFirst made to each other
as of specific dates. The assertions embodied in those
representations and warranties were made solely for purposes of
the Merger Agreement and are not intended to provide factual,
business or financial information about Sun or OceanFirst.
Moreover, some of those representations and warranties may not be
accurate or complete as of any specified date, may be subject to
a contractual standard of materiality different from those
generally applicable to shareholders or different from what a
shareholder might view as material, may have been used for
purposes of allocating risk between Sun and OceanFirst 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 Sun and OceanFirst that is publicly filed in reports
and statements with the SEC.
The foregoing description of the Merger Agreement is included to
provide information regarding its terms and does not purport to
be complete and is qualified in its entirety by reference to the
Merger Agreement, which is filed as Exhibit 2.1 to this Current
Report on Form 8-K, and is incorporated
herein by reference.
Item 1.01. |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On June27, 2017,
Sun entered into an employment agreement and change in control
continuity agreement with its President and Chief Executive
Officer Thomas M. OBrien. The new agreements supersede Mr.OBriens
prior employment agreement with Sun.
to the employment
agreement, Mr.OBrien will continue to serve as President and
Chief Executive Officer of Sun and Sun National Bank, with an
annual base salary of no less than $750,000 and a target annual
bonus opportunity of no less than 75% of his annual base salary
and will be eligible for annual equity-based award grants with a
grant date fair market value of no less than 75% of his annual
base salary. If Mr.OBriens employment were terminated by Sun
without cause or by him for good reason prior to a change in
control, he would be entitled to (a)cash severance equal to the
product of (i)the sum of his annual base salary and the average
of his annual cash bonus for the two fiscal years prior to his
termination, multiplied by (ii)the greater of (x) 18 and (y)the
number of whole and partial months remaining in the term of the
agreement up to a maximum of 24 months (the number of months
equal to such greater number, the severance period), divided by
12; (b)a prorated annual bonus for the year of termination; (c)a
payment equal to the monthly premium for health insurance
continuation for a number of months equal to the severance
period; and (d)vesting of any equity-based awards that would have
vested within 18 months following his termination (other than
certain matching equity-based awards that were granted to
Mr.OBrien upon his date of hire, which would vest in full). The
severance benefits are subject to Mr.OBriens execution of a
release of claims in favor of Sun. In addition, the employment
agreement subjects Mr.OBrien to noncompetition and
nonsolicitation covenants until the first anniversary of his date
of termination and perpetual confidentiality and nondisparagement
covenants.
Upon a change in
control, Mr.OBriens employment agreement would be superseded by
his change in control continuity agreement. to the terms of his
change in control continuity agreement, if, during the period
immediately prior to and two years following a change in control
of Sun, Mr.OBriens employment were terminated by Sun without
cause or by him for good reason, he would be entitled to (a)cash
severance equal to the product of (i)three multiplied by (ii)the
sum of his annual base salary and highest annual bonus earned or
payable over a multi-year period preceding the date of
termination; (b)a prorated annual bonus for the year of
termination; (c)a payment in lieu of employer retirement plan
contributions that would have been made during the three-year
period following the date of termination; (d)a payment equal to
125% of the expected cost of premiums for coverage under Suns
welfare plans for such three-year period; and (e)vesting of any
unvested equity-based awards. In addition, upon a change in
control, Mr.OBrien would be entitled to automatic vesting of any
unvested equity compensation awards. The change in control
continuity agreement subjects Mr.OBrien to a perpetual
confidentiality covenant. If any payments or benefits under the
change in control continuity agreement would be subject to
Section280G of the Internal Revenue Code, such payments or
benefits would be reduced to the extent that such reduction would
place Mr.OBrien in a better after-tax position.
The foregoing
summary of the employment agreement and change in control
continuity agreement with Mr.OBrien does not purport to be
complete and is qualified in its entirety by reference to the
employment agreement (included as Exhibit 10.1 hereto) and the
change in control continuity agreement (included as Exhibit 10.2
hereto), each of which is incorporated herein by
reference.
Item 1.01 |
Voting and
Support Agreements
Simultaneous with
the execution of the Merger Agreement, OceanFirst entered into
separate voting and support agreements with (i)Bernard Brown and
Sidney Brown, along with certain other members of the Brown
family and certain of their affiliates and (ii)WLR SBI
AcquisitionCo, LLC and its ultimate controlling affiliate, WL
Ross Co, LLC, in which each such shareholder has agreed, among
other things, to vote the shares of Sun Common Stock owned
beneficially or of record by such shareholder in favor of the
First-Step Merger. In addition, each such shareholder has agreed
to vote against any proposal made in competition with the
First-Step Merger, as well as certain other restrictions with
respect to the voting and transfer of such shareholders shares of
Sun Common Stock.
* * *
Forward-Looking
Statements
This Current
Report on Form 8-K contains forward-looking statements within the
meaning of the federal securities laws, including Section27A of
the Securities Act of 1933, as amended, and Section21E of the
Securities Exchange Act of 1934, as amended. These
forward-looking statements may include: management plans relating
to the proposed transaction; the expected timing of the
completion of the proposed transaction; the ability to complete
the proposed transaction; the ability to obtain any required
regulatory, shareholder or other approvals; any statements of the
plans and objectives of management for future operations,
products or services, including the execution of integration
plans relating to the proposed transaction and the recently
completed acquisitions of Cape Bancorp, Inc (Cape) and Ocean
Shore Holding Co. (Ocean Shore) by OceanFirst; any statements of
expectation or belief; projections related to certain financial
metrics; and any statements of assumptions underlying any of the
foregoing. Forward-looking statements are typically identified by
words such as believe, expect, anticipate, intend, seek, plan,
will, would, target outlook, estimate, forecast, project and
other similar words and expressions or negatives of these words.
Forward-looking statements are subject to numerous assumptions,
risks and uncertainties, which change over time and are beyond
our control. Forward-looking statements speak only as of the date
they are made. Neither OceanFirst nor Sun assumes any duty and
does not undertake to update any forward-looking statements.
Because forward-looking statements are by their nature, to
different degrees, uncertain and subject to assumptions, actual
results or future events could differ, possibly materially, from
those that OceanFirst or Sun anticipated in its forward-looking
statements, and future results could differ materially from
historical performance. Factors that could cause or contribute to
such differences include, but are not limited to, those included
under Item 1A Risk Factors in OceanFirsts Annual Report on Form
10-K, those
included under Item 1A Risk Factors in Suns Annual Report on Form
10-K, those disclosed in OceanFirsts and Suns respective other
periodic reports filed with the Securities and Exchange
Commission (the SEC), as well as the possibility that expected
benefits of the proposed transaction and the Cape and Ocean Shore
acquisitions may not materialize in the timeframe expected or at
all, or may be more costly to achieve; that the proposed
transaction may not be timely completed, if at all; that prior to
the completion of the proposed transaction or thereafter,
OceanFirsts and Suns respective businesses may not perform as
expected due to transaction-related uncertainty or other factors;
that the parties are unable to successfully implement integration
strategies related to the proposed transaction and the Cape and
Ocean Shore acquisitions; that required regulatory, shareholder
or other approvals are not obtained or other customary closing
conditions are not satisfied in a timely manner or at all;
reputational risks and the reaction of the companies
shareholders, customers, employees and other constituents to the
proposed transaction; and diversion of management time on
merger-related matters. These risks, as well as other risks
associated with the proposed transaction, will be more fully
discussed in the joint proxy statement/prospectus that will be
included in the registration statement on Form S-4 that will be
filed with the SEC in connection with the proposed transaction.
While the list of factors presented here is, and the list of
factors to be presented in the registration statement on Form S-4
will be, considered representative, no such list should be
considered to be a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant
additional obstacles to the realization of forward looking
statements. For any forward-looking statements made in this Form
8-K or in any documents, OceanFirst and Sun claim the protection
of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995. Annualized,
pro forma, projected and estimated numbers are used for
illustrative purposes only, are not forecasts and may not reflect
actual results.
Important Other
Information
In connection with the
proposed transaction, OceanFirstintends to file a registration
statement on Form S-4 containing a joint proxy
statement/prospectus and other documents regarding the proposed
transaction with the SEC.Before making any voting or
investment decision, the respective investors and shareholders of
OceanFirst and Sun are urged to carefully read the entire joint
proxy statement/prospectus when it becomes available and any
other relevant documents filed by either company with the SEC, as
well as any amendments or supplements to those documents, because
they will contain important information
aboutOceanFirst, Sun and the proposed
transaction. Investors and security holders are also
urged to carefully review and consider each of OceanFirsts and
Suns public filings with the SEC, including but not limited to
their Annual Reports on Form 10-K, their proxy statements, their
Current Reports on Form 8-K and their Quarterly Reports on Form
10-Q. When
available, copies of the joint proxy statement/prospectus will be
mailed to the respective shareholders of OceanFirst and Sun. When
available, copies of the joint proxy statement/prospectus also
may be obtained free of charge at theSECsweb site
athttp://www.sec.gov, or by directing a request toOceanFirst
Financial Corp., 975 Hooper Avenue, Toms River, New Jersey 08753,
Attn:ChristopherD.Maher or Sun Bancorp, Inc., 350 Fellowship
Road, Suite 101, Mount Laurel, NJ 08054, Attn: Janice M. Clark,
Corporate Secretary.
Participants in the
Solicitation
OceanFirst, Sun and certain of
their respective directors and executive officers, under the SECs
rules, may be deemed to be participants in the solicitation of
proxies of OceanFirsts and Suns shareholders in connection with
the proposed transaction. Information about the directors and
executive officers of OceanFirst and their ownership of
OceanFirst common stock is set forth in the proxy statement for
OceanFirsts 2017 Annual Meeting of Stockholders, as filed with
the SEC on Schedule 14A on April26, 2017. Information about the
directors and executive officers of Sun and their ownership of
Suns common stock is set forth in the proxy statement for Suns
2017 Annual Meeting of Shareholders, as filed with the SEC on
Schedule 14A on May30, 2017. Additional information regarding the
interests of those participants and other persons who may be
deemed participants in the solicitation of proxies of OceanFirsts
and Suns shareholders in connection with the proposed transaction
may be obtained by reading the joint proxy statement/prospectus
regarding the proposed transaction when it becomes available.
Once available, free copies of the joint proxy
statement/prospectus may be obtained as described in the
preceding paragraph.
No Offer or
Solicitation
This communication is not
intended to and shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer
to buy any securities or a solicitation of any vote of approval,
nor shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
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 Section10 of
the Securities Act of 1933, as amended.
Item 1.01. |
(d) |
Exhibits. The following exhibits are filed with this report: |
|
|
|
| 2.1 |
Agreement and Plan of Merger, dated as of June30, 2017, by and among OceanFirst Financial Corp., Sun Bancorp, Inc. and Mercury Merger Sub Corp. |
| 10.1 |
Employment Agreement, dated as of June27, 2017, by and between Sun Bancorp, Inc. and Thomas M. OBrien. |
| 10.2 |
Change In Control Continuity Agreement, dated as of June27, 2017, by and between Sun Bancorp, Inc. and Thomas M. OBrien. |
|
Schedules have been omitted to Item 601(b)(2) of Regulation S-K. Sun hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the U.S. Securities and Exchange Commission. |
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.
| Date: July3, 2017 | By: |
|
| Name: | Patricia M. Schaubeck | |
| Title: | Executive Vice President and General Counsel |
EXHIBIT
INDEX
| 2.1 |
Agreement and Plan of Merger, dated as of June30, 2017, by and among OceanFirst Financial Corp., Sun Bancorp, Inc. and Mercury Merger Sub Corp. |
| 10.1 |
Employment Agreement, dated as of June27, 2017, by and between Sun Bancorp, Inc. and Thomas M. OBrien. |
| 10.2 |
Change In Control Continuity Agreement, dated as of June27, 2017, by and between Sun Bancorp, Inc. and Thomas M. OBrien. |
| Schedules have been omitted |
SUN BANCORP INC /NJ/ ExhibitEX-2.1 2 d370170dex21.htm EX-2.1 EX-2.1 Exhibit 2.1 AGREEMENT AND PLAN OF MERGER by and among OCEANFIRST FINANCIAL CORP.,…To view the full exhibit click here
About Sun Bancorp, Inc. (NASDAQ:SNBC)
Sun Bancorp, Inc. is a bank holding company. The Company’s principal subsidiary is Sun National Bank (the Bank). Through the Bank, it provides an array of community banking services to consumers, small businesses and mid-size companies. The lending services to businesses include term loans, lines of credit and commercial mortgages. The commercial deposit services include business checking and money market accounts, and cash management solutions, such as online banking, electronic bill payment, lockbox services, remote deposit and controlled disbursement services. Its lending services to consumers consist primarily of lines of credit of overdraft sweeps. Its consumer deposit services include checking accounts, savings accounts, certificates of deposit and individual retirement accounts. In addition, the Company, through its subsidiary, Prosperis Financial Solutions, LLC., offers client access to mutual funds, securities brokerage, annuities and investment advisory services.