Unassociated Document
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 8, 2009
CRESCENT
FINANCIAL CORPORATION
______________________________________________________________________________
(Exact
name of Registrant as specified in its charter)
|
North
Carolina
|
000-32951
|
56-2259050 |
| (State or other
jurisdiction |
(Commission File
Number) |
(IRS Employer
Identification |
| of
incorporation) |
|
No.) |
| |
|
|
| 1005 HIGH
HOUSE ROAD, CARY, NC |
27513 |
| (Address of
principal executive offices) |
(Zip
Code) |
Registrant’s
telephone number, including area code (919)
460-7770
Not
Applicable
______________________________________________________________________________
(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)
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|
o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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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
January 9, 2009, Crescent Financial Corporation (the “Registrant”), parent
company of Crescent State Bank, entered into a Letter Agreement, including the
Securities Purchase Agreement – Standard Terms (together with the Letter
Agreement, the “Purchase Agreement”), with the United States Department of the
Treasury (the “Treasury”), pursuant to which the Registrant issued and sold to
the Treasury (1) 24,900 shares of the Registrant’s Fixed Rate Cumulative
Perpetual Preferred Stock, Series A (the “Preferred Stock”) and (2) a warrant to
purchase 833,705 shares of the Registrant’s common stock, $1.00 par value per
share, for an aggregate purchase price of $24.9 million in cash. The
description of the Purchase Agreement contained or incorporated herein is a
summary and is qualified in its entirety by reference to the full text of the
Purchase Agreement attached as Exhibit 10.1 hereto and incorporated herein by
reference.
The
Preferred Stock will qualify as Tier 1 capital and will pay cumulative dividends
at a rate of 5% per annum for the first five years, and 9% per annum
thereafter. The Registrant may not redeem the Preferred Stock during
the first three years following the investment by the Treasury, except with the
proceeds from a “Qualified Equity Offering” (as defined in Annex A to the
articles of amendment described in Item 5.03 and attached as Exhibit 3.1 hereto
and incorporated herein by reference). After three years, the
Registrant may, at its option, redeem the Preferred Stock at its liquidation
preference plus accrued and unpaid dividends. The Preferred Stock is
generally nonvoting. The description of the Preferred Stock contained
herein is a summary and is qualified in its entirety by reference to the full
text of the articles of amendment.
The
warrant has a 10-year term and is immediately exercisable upon its issuance,
with an initial per share exercise price of $4.48. The warrant has
anti-dilution protections, registration rights, and certain other protections
for the holder. If the Registrant receives aggregate gross cash
proceeds of not less than $24,900,000 from Qualified Equity Offerings on or
prior to December 31, 2009, the number of shares of common stock issuable
pursuant to the Treasury’s exercise of the warrant will be reduced by one-half
of the original number of shares, taking into account all adjustments,
underlying the warrant. Pursuant to the Purchase Agreement, the
Treasury has agreed not to exercise voting power with respect to any shares of
common stock issued upon exercise of the Warrant. The description of
the warrant contained herein is a summary and is qualified in its entirety by
reference to the full text of the warrant, which is attached as Exhibit 4.1
hereto and incorporate by reference herein.
| Item
3.02 |
Unregistered
Sales of Equity Securities. |
The
information set forth under Item 1.01 is incorporated by reference into this
Item 3.02.
The
issuance and sale of the Preferred Stock and the Warrant is exempt from
registration pursuant to section 4(2) of the Securities Act of
1933. The Registrant has not engaged in general solicitation or
advertising with regard to the issuance and sale of such securities and has not
offered securities to the public in connection with this issuance and
sale.
| Item
3.03 |
Material
Modification to Rights of Security
Holders. |
Pursuant
to the terms of the Purchase Agreement, upon issuance of the Preferred Stock,
the ability of the Company to declare or pay dividends or distributions on, or
purchase, redeem or otherwise acquire for consideration, shares of its Junior
Stock (as defined below) and Parity Stock (as defined below) will be subject to
restrictions. The redemption, purchase, or other acquisition of trust
preferred securities of the Registrant or its affiliates also will be
restricted. These restrictions will terminate on the earlier of (1)
the third anniversary of the date of issuance of the Preferred Stock and (2) the
date on which the Preferred Stock has been redeemed in whole or the Treasury has
transferred all of the Preferred Stock to third parties.
In
addition, pursuant to the articles of amendment described in Item 5.03 below,
the ability of the Registrant to declare or pay dividends or distributions on,
or repurchase, redeem or otherwise acquire for consideration, shares of its
Junior Stock and Parity Stock will be subject to restrictions in the event that
the Registrant fails to declare and pay full dividends (or declare and set aside
a sum sufficient for payment thereof) on the Preferred Stock.
“Junior
Stock” means the Registrant’s common stock and any other class or series of
stock of the Registrant the terms of which expressly provide that it ranks
junior to the Preferred Stock as to dividend rights and/or rights on
liquidation, dissolution or winding up of the Company. “Parity Stock”
means any class or series of stock of the Company the terms of which do not
expressly provide that such class or series will rank senior or junior to the
Preferred Stock as to dividend rights and/or rights on liquidation, dissolution
or winding up of the Company (in each case without regard to whether dividends
accrue cumulatively or noncumulatively).
| Item
5.02 |
Departure of
Directors or Certain Officers; Election of Directors; Appointment of
Certain
Officers;
Compensatory Arrangements of Certain
Officers.
|
Pursuant
to the terms of the Purchase Agreement, the Company is required to have in place
certain limitations on the compensation of certain executives, applicable in
certain situations. In that regard, the top five senior executive
officers of the Registrant executed and delivered a waiver whereby the executive
voluntarily released the Registrant from any and all obligations to pay
compensation prohibited by section 111 of the Emergency Economic Stabilization
Act of 2008 or any regulations promulgated thereunder and waives any present or
future claims against the Registrant for any changes to executive’s regular,
bonus, or incentive compensation or benefit-related arrangements, agreements or
policies and any other changes required to be made by the Treasury to comply
with the terms of the Purchase Agreement. The top five senior
executive officers of the Company also entered into Executive Compensation
Modification Agreements to ensure compliance with Section 111 of the Emergency
Economic Stabilization Act of 2008 and regulations promulgated
thereunder. The form of Executive Compensation Modification Agreement
is filed herewith as Exhibit 10.2.
| Item
5.03 |
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
|
On
January 8, 2009, the Registrant filed articles of amendment for the purpose of
amending its articles of incorporation to fix the designations, preferences,
limitations and relative rights of a series of Fixed Rate Cumulative Perpetual
Preferred Stock, Series A, no par value, with a liquidation preference of $1,000
per share in connection with the Purchase Agreement. The articles of
amendment were effective immediately upon filing. A copy of the
articles of amendment is attached as Exhibit 3.1 hereto and incorporated herein
by reference.
| Item 9.01 |
Financial Statements and
Exhibits.
|
(d) Exhibits.
The
following exhibits are filed herewith:
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EXHIBIT NO.
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DESCRIPTION OF EXHIBIT
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|
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3.1
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Articles
of Amendment of Crescent Financial Corporation, filed January 8,
2009
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4.1
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Warrant
to Purchase Common Stock of Crescent Financial Corporation, dated January
9, 2009
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|
4.2
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Form
of Certificate for the Series A Preferred Stock
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|
10.1
|
|
Letter
Agreement including the Securities Purchase Agreement- Standard Terms,
between
Crescent
Financial Corporation and the United States Department of the Treasury,
dated
January
9, 2009
|
|
10.2
|
|
Form
of Executive Compensation Modification
Agreement
|
The
Current Report on Form 8-K (including information included or incorporated by
reference herein) may contain, among other things, certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, (i) statements regarding certain of the
Registrant’s goals and expectations with respect to earnings, income per share,
revenue, expenses and the growth rate in such items, as well as other measures
of economic performance, including statements relating to estimates of credit
quality trends, and (ii) statements preceded by, followed by or that include the
words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,”
“expect,” “intend,” “plan,” “projects,” “outlook” or similar
expressions. These statements are based upon the current belief and
expectations of the Registrant’s management and are subject to significant risks
and uncertainties that are subject to change based on various factors (many of
which are beyond the Registrant’s control).
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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CRESCENT
FINANCIAL CORPORATION |
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By:
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/s/ Michael
G. Carlton |
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Michael
G. Carlton |
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President
and Chief Executive Officer |
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| |
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| Dated: January
14, 2009 |
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EXHIBIT
INDEX
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EXHIBIT NO.
|
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DESCRIPTION OF EXHIBIT
|
|
|
|
|
3.1
|
|
Articles
of Amendment of Crescent Financial Corporation, filed January 8,
2009
|
|
4.1
|
|
Warrant
to Purchase Common Stock of Crescent Financial Corporation, dated January
9, 2009
|
|
4.2
|
|
Form
of Certificate for the Series A Preferred Stock
|
|
10.1
|
|
Letter
Agreement including the Securities Purchase Agreement- Standard Terms,
between
Crescent
Financial Corporation and the United States Department of the Treasury,
dated
January
9, 2009
|
|
10.2
|
|
Form
of Executive Compensation Modification
Agreement
|