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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): January 3, 2008
BRADFORD BANCORP, INC.
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(Exact name of registrant as specified in its charter)
MARYLAND 333-143696 26-0223245
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
6910 YORK ROAD, BALTIMORE, MARYLAND 21212
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(Address of principal executive offices) (Zip Code)
(410) 377-9600
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(Registrant's telephone number, including area code)
Not Applicable
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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:
[ ] 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))
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ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
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Termination Agreement. On January 3, 2008, Bradford Bancorp, Inc.
("Bradford Bancorp") entered into a Mutual Termination Agreement (the
"Termination Agreement") by and among Bradford Bancorp, Bradford Bank MHC,
Bradford Mid-Tier Company and Bradford Bank (collectively, "Bradford") and
Patapsco Bancorp, Inc. ("Patapsco").
Under the terms of the Termination Agreement, Bradford and Patapsco have
mutually terminated the Agreement and Plan of Merger (the "Merger Agreement")
that the parties previously executed on March 19, 2007. Pursuant to the
Termination Agreement, Bradford Mid-Tier Company has agreed to pay Patapsco a
termination fee of $2.0 million payable in the form of a promissory note
attached to the Termination Agreement (the "Promissory Note"). The Promissory
Note matures on December 31, 2008 and provides for interest equal to the prime
rate plus one percent. On August 1, 2008, this rate will increase to the prime
rate plus three percent. The Termination Agreement also provides for a mutual
release of claims in connection with the termination of the Merger Agreement.
Copies of the Merger Agreement and the Termination Agreement, including
the Promissory Note, are included as Exhibits 2.1 and 2.2, respectively, to this
Current Report on Form 8-K and are incorporated herein by reference. The
material terms and conditions of the Merger Agreement were previously disclosed
in Patapsco's Current Report on Form 8-K filed on March 21, 2007.
Circumstances Surrounding Termination. Bradford Bancorp was advised by its
marketing agent that, given the downturn in the market for financial
institutions since the signing of the Merger Agreement and the mailing of the
stock offering prospectus on October 29, 2007, it was unlikely that Bradford
Bancorp would be able to sell the minimum number of shares necessary to complete
its public offering unless Bradford Bancorp's valuation was lowered in such a
way so as to lower the price-to-tangible book value ratio, which is a measure
that many investors use to gauge the attractiveness of an investment. Due to the
financial structure of the transaction, in order to obtain a new valuation that
reflects a lower price-to-tangible book value ratio and complete the merger with
Patapsco, Bradford Bancorp would be required to significantly reduce the merger
consideration.
Based on the above, Bradford Bancorp's board of directors communicated
to the board of directors of Patapsco a proposal to significantly lower the
price per share to be paid to Patapsco stockholders. After review, the board of
directors of Patapsco concluded that the revised proposal submitted by Bradford
Bancorp was not sufficient to compensate Patapsco's stockholders for the risk
they would incur if Patapsco continued to pursue a transaction contingent on a
stock offering in the current bank stock market. As a result, the Patapsco board
of directors concluded that it would be in the best interests of its
stockholders to negotiate the termination of the Merger Agreement.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
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(d) Exhibits.
The following Exhibits are attached as part of this report:
2.1 Merger Agreement dated March 19, 2007*
2.2 Mutual Termination Agreement dated January 3, 2008, including
Promissory Note dated January 3, 2008
99.1 Press Release dated January 3, 2008
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* Incorporated by reference from Exhibit 2.1 to Patapsco Bancorp, Inc.'s Current
Report on Form 8-K filed on March 21, 2007.
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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 thereunto duly authorized.
Date: January 3, 2008 /s/ David L. Costello, III
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David L. Costello, III
Executive Vice President and
Chief Financial Officer