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): March 13, 2009
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SALISBURY BANCORP, INC.
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(Exact name of registrant as specified in charter)
Connecticut 000-24751 06-1514263
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
5 Bissell Street, Lakeville, Connecticut 06039-1868
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (860) 435-9801
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligations 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 (12
C.F.R. 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
C.F.R. 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 C.F.R. 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 C.F.R. 240.13e-4(c))
Section 1. Registrant's Business and Operations
Item 1.01. Entry into a Material Definitive Agreement.
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Section 3. Securities and Trading Markets
Item 3.02. Unregistered Sales of Unregistered Securities.
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Item 3.03. Material Modification to Rights of Security Holders.
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Section 5. Corporate Governance and Management
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
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Appointment of Certain Officers; Compensatory Arrangements of
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Certain Officers.
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Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change to Fiscal
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Year.
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On March 13, 2009, Salisbury Bancorp, Inc. (the "Company") entered into
a Letter Agreement including the Securities Purchase Agreement-Standard Terms,
as supplemented by the letter dated March 13, 2009 relating to the American
Recovery and Reinvestment Act of 2009, (together, the "Purchase Agreement"),
with the U.S. Treasury Department (the "Treasury") pursuant to which the Company
issued and sold 8,816 shares of its Fixed Rate Cumulative Perpetual Preferred
Stock, Series A, par value $.01 per share (the "Series A Preferred Stock") under
the Capital Purchase Program (the "CPP") of the Emergency Economic Stabilization
Act of 2008 ("EESA") for aggregate consideration of $8,816,000 in cash. The
Series A Preferred Stock qualifies as Tier 1 capital for regulatory purposes.
The Series A Preferred Stock ranks senior to the Common Stock, par
value $.10 per share (the "Common Stock") in the payment of dividends and upon
distributions and amounts payable upon liquidation, dissolution or winding-up of
the Company; it has a liquidation preference of $1,000 per share. The Series A
Preferred Stock pays a cumulative dividend of five percent (5%) per annum on the
liquidation preference for the first five (5) years it is outstanding and
thereafter at a rate of nine percent (9%) per annum when and if declared by the
Company's Board of Directors. The Series A Preferred Stock is non-voting, other
than voting rights on certain matters that could adversely affect the Series A
Preferred Stock. If the dividends on the Series A Preferred Stock have not been
paid for an aggregate of six (6) quarterly dividend periods or more, whether or
not consecutive, the Company's authorized number of directors will be
automatically increased by two (2) and the holders of the Series A Preferred
Stock will have the right to elect those directors at the Company's next annual
meeting or at a special meeting called for that purpose; these two directors
will be elected annually and will serve until all accrued and unpaid dividends
in the Series A Preferred Stock have been paid. Prior to March 13, 2012, unless
the Company has redeemed the Series A Preferred Stock in whole or the Treasury
has transferred all the shares of Series A Preferred Stock to a third party, the
consent of the Treasury will be required for the Company to pay any quarterly
dividend on the Common Stock in excess of $0.28 per share or redeem, purchase or
acquire any shares of its Common Stock or other equity or capital securities,
other than in connection with benefit plans consistent with past practice and
certain other circumstances.
2
The Series A Preferred Stock has no maturity date. The Series A
Preferred Stock may be redeemed by the Company at one hundred percent (100%) of
the issue price plus any accrued and unpaid dividends at any time.
As part of the transaction, the Company also issued to the Treasury an
immediately exercisable ten-year Warrant to purchase up to 57,671 shares of the
Common Stock at an initial exercise price of $22.93 per share. If the Warrant
were fully exercised, the Company estimates that the ownership percentage of the
current shareholders would be diluted by approximately 3.3% percent. If the
Company completes one or more qualified equity offerings as described above on
or prior to December 31, 2009 that result in the Company receiving aggregate
gross proceeds of at least $8,816,000, the number of the shares of Common Stock
underlying the portion of the Warrant then held by the Treasury will be reduced
by one-half of the shares of Common Stock originally covered by the Warrant. The
Treasury has agreed not to exercise voting power with respect to any shares of
Common Stock issued upon exercise of the Warrant.
The Series A Preferred Stock and the Warrant were issued in a private
placement exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended. The Company has agreed to register the resale or
secondary offering of the Series A Preferred Stock, the Warrant and the shares
of Common Stock issuable upon exercise of the Warrant (the "Warrant Shares") as
soon as practicable after the date of the issuance of the Series A Preferred
Stock and the Warrant. Neither the Series A Preferred Stock nor the Warrant are
subject to any contractual restrictions on transfer, except that (i) the
Treasury may only transfer or exercise an aggregate of one-half of the Warrant
Shares prior to the earlier of the date on which the Company has received
aggregate gross proceeds of not less than $8,816,000 million from one or more
qualified equity offerings and December 31, 2009 and (ii) if the Company redeems
all the shares of the Series A Preferred Stock, it has the right to purchase the
Warrant or the Warrant Shares held by the Treasury at fair market value.
Pursuant to the terms of the Purchase Agreement, the Company agreed
that, until such time as the Treasury ceases to own any debt or equity
securities of the Company acquired pursuant to the Purchase Agreement or the
Warrant, the Company will take all necessary action to ensure that its benefit
plans with respect to its senior executive officers comply with Section 111 of
EESA, as amended, as implemented by any rules, regulations, guidance or other
requirements issued thereunder regulation under the EESA as of March 10, 2009
and has agreed to not adopt any benefit plans with respect to, or which covers,
its senior executive officers that do not comply with the EESA. Additionally,
John F. Perotti, Richard J. Cantele, Jr., John F. Foley, Diane E.R. Johnstone
and Gerard J. Baldwin (each a "Senior Executive Officer") executed waivers and
consents voluntarily waiving any claim against the Treasury or the Company for
any changes to such Senior Executive Officer's compensation or benefits that are
required to comply with Section 111 of EESA, as amended, as implemented by any
rules, regulations, guidance or other requirements issued thereunder,
acknowledging that such rules, regulations, guidance or other requirements may
require modification of the compensation, bonus, incentive and other benefit
plans, arrangements and policies and agreements (including so-called "golden
parachute" agreements) as they relate to the period the Treasury holds any
equity or debt securities of the Company acquired through the CPP and consenting
to the foregoing amendments. Further, each of the Senior Executive Officers has
entered a First Amendment to their Change in Control Agreement (the "CIC
Agreement") providing that no payment will be made or benefit provided under the
CIC Agreement if it would violate EESA, as amended, or any regulation
thereunder.
3
On March 10, 2009, the Company filed with the Secretary of the State of
the State of Connecticut a Certificate of Amendment to its Certificate of
Incorporation to designate the Series A Preferred Stock and to specify the
preferences, rights, qualifications, limitations and restrictions of the Series
A Preferred Stock.
The Board of Directors amended Section 1 of Article III of the
Company's Bylaws to provide that a director elected by the holders of the
preferred stock of the Company need not be a shareholder of the Company.
The terms of the Series A Preferred Stock and Warrant are set forth in
the Purchase Agreement, the Warrant and the Certificate of Amendment to the
Certificate of Incorporation, each of which is included as an exhibit to this
Report on Form 8-K and is incorporated by reference into these Items 1.01, 3.02,
3.03, 5.02 and 5.03. The terms of the amendment to the Bylaws and the CIC
Agreements are as set forth in the Amended and Restated Bylaws and the Form of
Amendment to Change in Control Agreement, which of which is included as an
exhibit to this Report on Form 8-K and is incorporated by reference into this
Item 5.03. The foregoing summary of the provisions of these documents is
qualified in its entirety by reference thereto.
Section 8. Other Events
Item 8.01. Other Events.
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On March 13, 2009, the Company issued a press release related to the
closing of the Capital Purchase Program transaction. A copy of such press
release is attached hereto as Exhibit 99.1.
Section 9. Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Not Applicable.
(d) Exhibits.
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Exhibit 3.1. Certificate of Amendment to the Certificate of
Incorporation for the Series A Preferred Stock
filed March 10, 2009.
Exhibit 3.2. Amended and Restated Bylaws as of March 10, 2009.
4
Exhibit 4.1. Warrant to purchase Common Stock dated March 13,
2009.
Exhibit 10.1. Letter Agreement between the Company and the
United States Department of the Treasury dated
March 13, 2009, including the Securities
Purchase Agreement-Standard Terms attached
thereto.
Exhibit 10.2 Supplemental Letter Agreement relating to the
American Recovery and Reinvestment Act of 2009
between the Company and the United States
Department of the Treasury dated March 13, 2009.
Exhibit 10.3 Form of Amendment to Change in Control Agreement
made as of March 10, 2009.
Exhibit 99.1 Press release dated March 13, 2009.
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 hereto duly authorized.
Dated: March 19, 2009 SALISBURY BANCORP, INC.
By: /s/ John F. Foley
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John F. Foley
Chief Financial Officer