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) September 16, 2010
Citizens Bancshares Corporation
(Exact name of registrant as specified in its charter)
Georgia | | 333-38509 | | 58-1631302 |
(State or other jurisdiction | | (Commission | | (IRS Employer |
of incorporation) | | File Number) | | Identification No.) |
75 Piedmont Avenue, NE, Atlanta, Georgia, USA | | 30303 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code (404) 659-5959
(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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o 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 September 17, 2010, as part of the U.S. Department of the Treasury (the “Treasury”) Troubled Asset Relief Program (“TARP”) Community Development Capital Initiative, Citizens Bancshares Corporation (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 4,379 shares (the “Series C Preferred Shares”) of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series C, having a liquidation preference of $1,000, for an aggregate purchase price of $4.379 million in cash. In addition to the Series C Preferred Shares, Treasury also holds 7,462 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B, issued under the TARP Community Development Capital Initiative pursuant to a letter agreement, and an Exchange Agreement — Standard Terms attached thereto, on August 13, 2010.
Participation in the TARP Community Development Capital Initiative is limited to financial institutions certified by the Community Development Financial Institution Fund (the “Fund”) as a Community Development Financial Institution (“CDFI”). The Company and its wholly-owned subsidiary, Citizens Trust Bank, are certified CDFIs, and accordingly, among other requirements, both entities have a primary mission of promoting community development.
The transaction closed on September 17, 2010 (the “Closing Date”). The issuance of the Series C Preferred Shares was a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.
The Series C Preferred Shares will qualify as Tier 1 capital and will pay cumulative dividends at a rate of 2% per annum for the first eight years after the Closing Date and 9% per annum thereafter, provided that the Company continues to be a certified CDFI. The Series C Preferred Shares have no maturity date and rank senior to the Company’s common stock with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Company and equal to, or pari passu with, existing or future authorized or issued preferred stock, including the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A, of which no shares are issued and outstanding, and Fixed Rate Cumulative Perpetual Preferred Stock, Series B, of which 7,462 shares are issued and outstanding. The Series C Preferred Shares will rank senior to any future authorized or issued preferred stock. The Company may, subject to consultation with the Federal Reserve Bank of Atlanta, redeem the Series C Preferred Shares at any time for its aggregate liquidation amount plus any accrued and unpaid dividends.
The Securities Purchase Agreement, pursuant to which the Series C Preferred Shares were issued, 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. So long as the Series C Preferred Shares remain outstanding, the Company and any of its subsidiaries, including Citizens Trust Bank, will be prohibited from declaring or paying any dividend, except regular quarterly dividends that are not more than the amount of the last quarterly cash dividend declared or, if lower, dividends announced to holders of the Company’s common stock prior to November 17, 2008, as adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction. Pursuant to the terms of the Series C Preferred Shares, without Treasury’s prior approval, there is a prohibition on repurchasing equity and trust preferred securities until all Series C Preferred Shares are redeemed in whole or transferred to third parties.
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Pursuant to the terms of the Securities Purchase Agreement, the Company agreed that, until such time as Treasury ceases to own any securities of the Company acquired pursuant to the Securities Purchase Agreement, the Company will take all necessary action to ensure that its benefit plans, with respect to executive compensation limitations, comply with Section 111 of Emergency Economic Stabilization Act of 2008 (“EESA”), as amended by any guidance, rule or regulation thereunder (collectively “Compensation Regulations”). As a condition to the closing of the transaction, each of James E. Young, Cynthia N. Day, Samuel J. Cox, Bunny Stokes, Jr., and Kevin Wilson, the Company’s senior executive officers (as defined in the Securities Purchase Agreement) (the “Senior Executive Officers”), 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 EESA or any Compensation Regulations and acknowledging that such regulations may require modification of the compensation, bonus, incentive, and other benefit plans, arrangements, and policies and agreements (including so-called “golden parachute” and bonus agreements) as they relate to the period the Treasury holds any investment in the Company acquired through the TARP Community Development Capital Initiative.
The Securities Purchase Agreement may be amended unilaterally by the Treasury to the extent required to comply with any changes in applicable federal statutes, rules and regulations, and any other publications or interpretative releases of the Fund.
Copies of the Letter Agreement (including the Securities Purchase Agreement) and the corresponding form of Certificate for the Series C Preferred Shares, the Articles of Amendment to the Amended and Restated Articles of Incorporation establishing the terms of the Series C Preferred Shares, and the form of Waiver 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 September 16, 2010, the Company filed with the State of Georgia an Articles of Amendment to the Amended and Restated Articles of Incorporation establishing the terms of the Series C 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.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following exhibits are being filed herewith:
No. | | Description |
| | |
3.1 | | Articles of Amendment to the Restated Articles of Incorporation |
| | |
4.1 | | Form of Certificate for the Series C Preferred Stock |
| | |
10.1 | | Letter Agreement, dated September 17, 2010, including Securities Purchase Agreement — Standard Terms, incorporated by reference therein, between the Company and the United States Department of the Treasury |
| | |
10.2 | | Form of Waiver |
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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.
| CITIZENS BANCSHARES CORPORATION |
| |
| |
Dated: September 22, 2010 | By: | /s/ James E. Young |
| | James E. Young |
| | President and Chief Executive Officer |
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EXHIBIT INDEX
No. | | Description |
| | |
3.1 | | Articles of Amendment to the Restated Articles of Incorporation |
| | |
4.1 | | Form of Certificate for the Series C Preferred Stock |
| | |
10.1 | | Letter Agreement, dated September 17, 2010, including Securities Purchase Agreement — Standard Terms, incorporated by reference therein, between the Company and the United States Department of the Treasury |
| | |
10.2 | | Form of Waiver |
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