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FSGI > SEC Filings for FSGI > Form 8-K on 30-Oct-2012All Recent SEC Filings

Show all filings for FIRST SECURITY GROUP INC/TN



Entry into a Material Definitive Agreement, Material Modification to

Item 1.01. Entry Into a Material Definitive Agreement.

On October 24, 2012, the Board of Directors (the "Board") of First Security Group, Inc. (the "Company") authorized the adoption by the Company of a Tax Benefits Preservation Plan (the "Plan") and declared a dividend of one preferred stock purchase right (each a "Right" and collectively, the "Rights") for each outstanding share of the Company's common stock, par value $0.01 per share (the "Common Stock"), payable to holders of record as of the close of business on November 12, 2012 (the "Record Date"). Each Right entitles the registered holder to purchase from the Company one one-thousandth of one share of series B participating preferred stock, no par value, of the Company (the "Preferred Stock"), at a purchase price equal to $20.00 per one one-thousandth of a share, subject to adjustment (the "Purchase Price"). The description and terms of the Rights are set forth in the Plan, dated October 30, 2012, as the same may be amended from time to time, between the Company and Registrar and Transfer Company, as Rights Agent.

Purpose of the Plan

The Company has previously experienced substantial net operating losses, which it may "carry forward" in certain circumstances to offset current and future taxable income and thus reduce its federal income tax liability, subject to certain requirements and restrictions. The purpose of the Plan is to help preserve the value of the Company's deferred tax assets, such as its net operating losses ("Tax Benefits"), for U.S. federal income tax purposes.

These Tax Benefits can be valuable to the Company. However, if the Company experiences an "ownership change," as defined in Section 382 ("Section 382") of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder, its ability to use the Tax Benefits could be substantially limited and/or delayed, which would significantly impair the value of the Tax Benefits. Generally, the Company would experience an "ownership change" under Section 382 if one or more "5 percent shareholders" increase their aggregate percentage ownership by more than 50 percentage points over the lowest percentage of stock owned by such stockholders over the preceding three-year period. As a result, the Company has utilized a 5% "trigger" threshold in the Plan that is intended to act as a deterrent to any person or entity seeking to acquire 5% or more of the outstanding Common Stock without the prior approval of the Board.


Prior to a Distribution Date (as defined below), the Rights are not exercisable. After a Distribution Date, each Right is exercisable to purchase, for the Purchase Price, one one-thousandth of a share of Preferred Stock.

Distribution Date means the earlier of:

the 10th business day after public announcement that any person or group has become an Acquiring Person (as defined below); and

the 10th business day after the date of the commencement of a tender or exchange offer by any person which would or could, if consummated, result in such person becoming an Acquiring Person, subject to extension by the Board.


If any person or group becomes a "5-percent shareholder" (an "Acquiring Person") (subject to certain exceptions described in the Plan), then on a Distribution Date, each Right (other than Rights beneficially owned by the Acquiring Person and certain affiliated persons) will entitle the holder to purchase, for the Purchase Price, a number of shares of Common Stock of the Company equal to the quotient of (x) two times the Purchase Price divided by (y) the then current market price of the Company's Common Stock; provided that (i) none of the Company and certain affiliates of the Company shall be an Acquiring Person, (ii) none of certain existing "5-percent shareholders" (including certain persons who are "5-percent shareholders" following specified exchange offers with the Company) shall be an Acquiring Person unless and until any such "5-percent shareholder" increases its percentage stock ownership in the Company by more than one-tenth of one percentage point, (iii) none of certain other "grandfathered persons" (as described in the Plan) shall be an Acquiring Person so long as any such "grandfathered person" satisfies the applicable requirements set forth in the Plan, (iv) no person or group who or which the Board determines, in its sole discretion, has inadvertently become a "5-percent shareholder" (or inadvertently failed to continue to qualify as a "grandfathered person") shall be an Acquiring Person so long as such Person promptly enters into, and delivers to the Company, an irrevocable commitment promptly to divest, and thereafter promptly divests (without exercising or retaining any power, including voting, with respect to such securities), sufficient securities of the Company so that such person's (or such group's) percentage stock ownership in the Company is less than 5 percent (or, in the case of any person or group that has inadvertently failed to qualify as a "grandfathered person," the securities of the Company that caused such

person or group to fail to qualify as a "grandfathered person"), (v) no person or group that has become a "5-percent shareholder" shall be an Acquiring Person . . .

Item 3.03. Material Modification to Rights of Security Holders

The information contained in Item 1.01 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, 2012, in connection with the adoption of the Plan referenced in Item 1.01 above, the Company filed Articles of Amendment to the Charter of Incorporation (the "Articles Amendment") with the Secretary of State of the State of Tennessee. See the description set out under Item 1.01 for a more complete description of the Rights and the Preferred Stock, which is incorporated herein by reference. A copy of the Articles Amendment is attached as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 8.01. Other Events.

On October 30, 2012, the Company issued a press release announcing the declaration of the Rights and the adoption of the Plan. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.    Exhibit Description
3.1            Articles of Amendment to the Charter of Incorporation, as filed
               with the Secretary of State of Tennessee on October 30, 2012.
4.1            Tax Benefits Preservation Plan, dated as of October 30, 2012,
               between First Security Group, Inc. and Registrar and Transfer
               Company, as Rights Agent, which includes the Form of Articles of
               Amendment as Exhibit A, Summary of Terms as Exhibit B and Form of
               Right Certificate as Exhibit C.
99.1           Press Release dated October 30, 2012.

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