Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 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 5, 2009
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First
Reliance Bancshares, Inc.
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(Exact
name of registrant specified in its charter)
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South
Carolina
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000-49757
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80-0030931
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(State
or other jurisdiction of incorporation)
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(Commission
File
Number)
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(IRS
Employer Identification No.)
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2170
West Palmetto Street
Florence,
South Carolina
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29501
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
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(843)
656-5000
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(Former
name or former address, if changed since last
report)
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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 (see General Instruction A.2. below):
¨ 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))
Item 1.01 Entry into a Material
Definitive Agreement
On March
6, 2009, as part of the capital purchase component of the U.S. Department of the
Treasury’s
(the “Treasury”) Troubled Asset Relief Program (“TARP”), First Reliance
Bancshares, Inc. (the “Company”) entered into a Letter Agreement (“Letter
Agreement”) and a Securities Purchase Agreement – Standard Terms attached
thereto (“Securities Purchase Agreement”) with the Treasury, pursuant to which
the Company agreed to issue and sell, and the Treasury agreed to purchase (i)
15,349 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock,
Series A, having a liquidation preference of $1,000 per share (“Series A
Preferred Shares”), and (ii) a warrant (the “Warrant”) to purchase up to
767.00767 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred
Stock, Series B, having a liquidation preference of $1,000 per share (“Series B
Preferred Shares”), at an exercise price of $0.01 per share, for an aggregate
purchase price of $15,349,000 in cash. The Warrant was exercised by
the Treasury on a net basis immediately following the closing of the
transaction, resulting in the issuance of 767 Series B Preferred
Shares. The investment amount approved by the Treasury was increased
from the previously announced $14.9 million due to an increase in the Company’s
total risk-weighted assets from September 30, 2008 to December 31,
2008.
This
transaction closed on March 6, 2009 (the “Closing Date”). The
issuance and sale of these securities was a private placement exempt from
registration pursuant to Section 4(2) of the Securities Act of
1933.
The
Series A Preferred Shares will qualify as Tier 1 capital and pay cumulative
dividends at a rate of 5% per annum for the first five years and
9% per annum thereafter. The Series B Preferred Shares will pay
cumulative dividends at a rate of 9% per annum. Dividends are payable
on both the Series A Preferred Shares and the Series B Preferred Shares
(collectively, the “Preferred Shares”) quarterly and are payable on February 15,
May 15, August 15, and November 15 of each year. Should the Company
fail to pay a total of six dividend payments on the Preferred Shares, whether or
not consecutive, the number of directors of the Company shall automatically be
increased by two and the holders of the Preferred Shares will have the right
to fill the newly created director positions at the Company’s annual or
special meeting called for that purpose, until the Company has paid
all such dividends that it had failed to pay. The Preferred Shares
have no maturity date and rank senior to the common stock with respect to the
payment of dividends and distributions and amounts payable upon liquidation,
dissolution and winding up of the Company. The Preferred Shares are
generally non-voting.
Pursuant
to the American Recovery and Reinvestment Act of 2009 (the “ARRA”), which
amended the Emergency Economic Stabilization Act of 2008 (“ESSA”), the Company
may, subject to consultation with the Federal Reserve Bank of Richmond, redeem
the Preferred Shares at any time for the aggregate liquidation amount plus
any accrued and unpaid dividends without first raising additional capital in an
equity offering.
The
Securities Purchase Agreement, pursuant to which the Preferred Shares and the
Warrant were sold, contains limitations on the payment of dividends on common
stock, junior preferred shares, and on other preferred shares. The
ability to repurchase common stock, junior preferred shares, or other preferred
shares is also restricted under the Securities Purchase Agreement.
The
Securities Purchase Agreement also subjects the Company to certain of the
executive compensation limitations included in the EESA, as amended by the
ARRA. As a condition to the closing of the transaction, each of
Messrs. F.R. Saunders, Jr., Ken Cox, Jr., Craig S. Evans, Thomas C. Ewart, and
Jeffrey A. Paolucci, the Company’s senior executive officers (as defined in the
Securities Purchase Agreement) (the “Senior Executive Officers”), (i) executed a
waiver (the “Waiver”) voluntarily waiving any claim against the Treasury or the
Company for any changes to compensation or benefits arrangements that are
required to comply with any regulations issued by the Treasury under the
TARP capital purchase program and acknowledging that the regulations may require
modification of the compensation, bonus, incentive, and other benefit plans,
arrangements, and policies and agreements (including so-called “golden
parachute” agreements) (collectively, “Benefit Plans”) as they relate to the
period that the Treasury holds any securities of the Company acquired through
the TARP capital purchase program; and (ii) entered into a senior executive
officer agreement (“Senior Executive Officer Agreement”) with the Company
amending the Benefit Plans with respect to such Senior Executive Officer as may
be necessary, during the period that the Treasury owns any securities of the
Company acquired through the TARP capital purchase program, to comply with
Section 111(b) of the EESA.
The Treasury may
unilaterally amend the Securities Purchase Agreement and all related
documents to the extent required to comply with any changes in applicable
federal statutes after the execution thereof.
Copies of
the Letter Agreement (including the Securities Purchase Agreement), a side
letter agreement with the Treasury pertaining to the ARRA, the form of
Certificate for the Series A Preferred Stock, the form of Certificate for the
Series B Preferred Stock, the Warrant, the Articles of Amendment to the
Company’s Articles of Incorporation authorizing a class of preferred stock, the
Articles of Amendment to the Company’s Articles of Incorporation establishing
the terms of the Preferred Shares, the form of Waiver executed by the Senior
Executive Officers, and the form of the Senior Executive Officer Agreement
executed by the Senior Executive Officers are included as exhibits to this Form
8-K and are incorporated by reference into these Items 1.01, 3.02, 3.03, 5.02
and 5.03. The foregoing summary of certain provisions of these documents is
qualified in its entirety by reference thereto.
Item 3.02 Unregistered Sales of Equity
Securities
The
information set forth under “Item 1.01 Entry into a Material Definitive
Agreement” is incorporated by reference into this Item 3.02.
Item 3.03 Material Modification to
Rights of Security Holders
The
information set forth under “Item 1.01 Entry into a Material Definitive
Agreement” is incorporated by reference into this Item 3.03.
Item
5.02 Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers
The
information set forth under “Item 1.01 Entry into a Material Definitive
Agreement” is incorporated by reference into this Item 5.02.
Item 5.03 Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year
On
February 27, 2009, the Company filed with the State of South Carolina Articles
of Amendment to its Articles of Incorporation to authorize a class of ten
million (10,000,000) shares of preferred stock, no par value. The
amendment to the Company’s Articles of
Incorporation was approved by the shareholders of the Company at a shareholders’
meeting held on February 24, 2009, pursuant to a proxy statement filed by the
Company on January 21, 2009. A copy of the Articles of Amendment is
included as an exhibit to this Form 8-K and is incorporated by reference into
this Item 5.03.
On March
5, 2009, the Company filed with the State of South Carolina Articles of
Amendment to its Articles of Incorporation establishing the terms of the
Preferred Shares. A copy of the Articles of Amendment is included as
an exhibit to this Form 8-K and is incorporated by reference into this Item
5.03.
Item 9.01 Financial Statements and
Exhibits
(d) Exhibits
The following exhibits are being filed
herewith:
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No.
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Description
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3.1
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Articles
of Amendment to the Articles of Incorporation authorizing a class of
preferred stock
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3.2
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Articles
of Amendment to the Articles of Incorporation establishing the terms of
the Series A Preferred Stock and the Series B Preferred
Stock
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4.1
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Form
of Certificate for the Series A Preferred Stock
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4.2
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Form
of Certificate for the Series B Preferred Stock
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4.3
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Warrant
to Purchase up to 767.00767 shares of Series B Preferred Stock, dated
March 6, 2009
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10.1
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Letter
Agreement, dated March 6, 2009, including Securities Purchase Agreement –
Standard Terms, incorporated by reference therein, between the Company and
the United States Department of the Treasury
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10.2
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Side
Letter Agreement, dated March 6, 2009
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10.3
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Form
of Waiver
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10.4
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Form
of Senior Executive Officer
Agreement
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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 hereunto
duly authorized.
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FIRST
RELIANCE BANCSHARES, INC.
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/s/ Jeffrey A. Paolucci
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Date: March
10, 2009
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Jeffrey
A. Paolucci
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Chief
Financial Officer
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EXHIBIT
INDEX
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No.
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Description
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3.1
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Articles
of Amendment to the Articles of Incorporation authorizing a class of
preferred stock
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3.2
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Articles
of Amendment to the Articles of Incorporation establishing the terms of
the Series A Preferred
Stock and the Series B Preferred Stock
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4.1
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Form
of Certificate for the Series A Preferred Stock
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4.2
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Form
of Certificate for the Series B Preferred Stock
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4.3
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Warrant
to Purchase up to 767.00767 shares of Series B Preferred Stock, dated
March 6, 2009
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10.1
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Letter
Agreement, dated March 6, 2009, including Securities Purchase Agreement –
Standard Terms, incorporated by reference therein, between the Company and
the United States Department of the Treasury
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10.2
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Side
Letter Agreement, dated March 6, 2009
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10.3
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Form
of Waiver
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10.4
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Form
of Senior Executive Officer
Agreement
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