Item
1.01. Entry into a Material Definitive Agreement.
Item
3.02. Unregistered Sales of Equity Securities.
On
October 31, 2008, Berkshire Bancorp Inc. (the “Company”) sold an aggregate of
60,000 shares (the “Shares”) of its 8% Non-Cumulative Mandatorily Convertible
Perpetual Series A Preferred Stock, par value $0.01 per share (the “Series A
Preferred Stock”), at a purchase price of $1,000 per share. The sale was made
pursuant to a Stock Purchase Agreement dated as of October 30, 2008 between
the
Company and the purchasers of the Series A Preferred Stock (the “Purchase
Agreement”). The Series A Preferred Stock was sold to the Company’s Chairman and
majority stockholder, and two non-affiliated investors for aggregate gross
proceeds of $60,000,000 (the “Financing”). The Financing restored the “well
capitalized” status, for regulatory purposes, of the Company’s wholly-owned
subsidiary, The Berkshire Bank.
Pursuant
to the Certificate of Designations for the Series A Preferred Stock
(“Certificate of Designations”), each outstanding share of Series A Preferred
Stock is mandatorily convertible on October 31, 2011 into 123.15 shares of
the
Company’s Common Stock, par value $.10 per share (the “Conversion Shares”),
which number is subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations, distributions of cash, debt or assets,
self
tender offers or exchange offers and other similar transactions that occur
after
issuance. However, the Company may not issue shares of Common Stock pursuant
to
the conversion equal to or exceeding more than 19.99% of the outstanding
shares
of the Common Stock or exceeding the currently authorized but unissued and
unreserved shares of Common Stock, without stockholder approval, which is
being
obtained. In addition, the Company may not issue shares of Common Stock pursuant
to conversion, to the extent a holder of Series A Preferred Stock would own
more
than 9.99% of the outstanding shares of Common Stock after giving effect
to such
conversion, which provision may be waived by the holder.
The
Series A Preferred Stock will bear non-cumulative dividends at the rate of
8% of
the liquidation preference per share per annum, payable quarterly commencing
on
December 31, 2008 and continuing until the Series A Preferred Stock is either
redeemed or converted. Pursuant to the Certificate of Designations, the ability
of the Company to declare or pay dividends or distributions on, or repurchase,
redeem, or otherwise acquire for consideration, shares of its Junior Stock
and
Parity Stock (as such terms are defined in the Certificate of Designations)
will
be subject to restrictions in the event that the Company fails to declare
and
pay full dividends (or declare and set aside a sum sufficient for payment
thereof) of its Series A Preferred Stock.
The
Company may redeem the Series A Preferred Stock in whole or in part at any
time
on or after April 30, 2009 and prior to the close of business on November
1,
2010. Such redemption is subject to any necessary prior approval of the Federal
Reserve Board. The redemption price is $1,100 per share of Series A Preferred
Stock, plus all accrued and unpaid dividends through the redemption date.
In
connection with the Financing, the Company agreed to file a registration
statement with the SEC covering the resale of the Conversion Shares and shares
of Common Stock otherwise issuable under the Certificate of Designations.
The
description of the Certificate of Designations and the Series A Preferred
Stock
set forth above does not purport to be complete and is qualified in its entirety
by reference to the full text of the Certificate of Designations, which is
filed
as an exhibit to this Report.
The
shares of Series A Preferred Stock were issued in the Financing without
registration under the Securities Act of 1933, as amended (the “Act”) in
reliance upon the exemptions from registration provided under Section 4(2)
of
the Act and Regulation D promulgated under the Act (“Reg D”). Each of the
investors represented in the Purchase Agreement, among other things, that
the
investor was acquiring the Series A Preferred Stock for investment for his
or
its account and that the investor was an “accredited investor” within the
meaning of Reg D.
ITEM
3.03 Material
Modification to Rights of Security Holders.
The
information set forth under “Item 1.01. Entry into a Material Definitive
Agreement” and “Item 3.02. Unregistered Sales of Equity Securities” is
incorporated by reference into this Item 3.03.
ITEM
5.03 Amendment
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On
October 30, 2008, the Company filed the Certificate of Designations with
the
Secretary of State of the State of Delaware designating 60,000 shares of
Series
A Preferred Stock.
ITEM
9.01 Financial Statements and Exhibits.
Exhibit
No. Description
|
3.1
|
Certificate
of Designations of the Series A Preferred Stock of the
Company.
|