Item 1.01. Entry into a Material Definitive Agreement

On September 25, 2017, Independence Bancshares, Inc. (the “Company”), the holding company for Independence National Bank, Greenville, South Carolina, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with First Reliance Bancshares, Inc. (“First Reliance”), the holding company for First Reliance Bank, Florence, South Carolina, which provides that, subject to the terms and conditions set forth in the Merger Agreement, the Company will merge with and into First Reliance, with First Reliance as the surviving corporation (the “Merger”). In addition, concurrently with or as soon as practicable following the Merger, Independence National Bank (the “Bank”) will be merged with and into First Reliance Bank.

Under the terms and subject to the conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of common stock, $0.01 par value per share, of the Company (“Independence Common Stock”) will be converted into the right to receive cash in the amount of $0.125 (the “Per Common Share Merger Price”). Immediately prior to the Effective Time, each outstanding share of Series A Preferred Stock, $0.01 par value per share, of the Company (the “Independence Preferred Stock”) will be redeemed for its stated per share redemption price by the payment of cash in the amount of $1,000. As of September 25, 2017, the Company had 20,502,760 shares of Independence Common Stock outstanding and 8,425 shares of Independence Preferred Stock outstanding. The Merger Agreement also includes provisions that address the treatment of the outstanding equity awards of the Company in the Merger. The parties anticipate closing the Merger during the first quarter of 2018.

The Merger Agreement has been unanimously approved by the boards of directors of each of the Company and First Reliance. The closing of the Merger is subject to the required approval of the Company’s shareholders, requisite regulatory approvals, and other customary closing conditions.

The Merger Agreement contains usual and customary representations and warranties that the Company and First Reliance made to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the contract between the Company and First Reliance, and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating its terms. Moreover, the representations and warranties are subject to a contractual standard of materiality that may be different from what may be viewed as material to shareholders, and the representations and warranties may have been used to allocate risk between the Company and First Reliance rather than establishing matters as facts.

The Merger Agreement provides certain termination rights for both the Company and First Reliance and further provides that a termination fee of $500,000 will be payable by the Company upon termination of the Merger Agreement under certain circumstances, including if the Company or its board of directors withdraws or modifies or qualifies in a manner adverse to First Reliance, its recommendation that its shareholders vote in favor of the Merger Agreement and the transactions contemplated thereby.

The foregoing summary of the Merger Agreement is qualified in its entirety by reference to the complete text of such document, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and which is incorporated herein by reference. The related press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Participants in the Merger Solicitation.

The Company and First Reliance, and certain of their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in respect of the Merger. Information regarding the directors and executive officers of the Company and First Reliance and other persons who may be deemed participants in the solicitation of the shareholders of the Company in connection with the Merger will be included in the proxy statement for the Company’s special meeting of shareholders, which will be filed by the Company with the SEC. Information about the Company’s directors and executive officers can also be found in the Company’s Form 10-K for the fiscal year ended December 31, 2016, as filed with the SEC on March 24, 2017, and other documents subsequently filed by the Company with the SEC. Additional information regarding the interests of such participants will be included in the proxy statement and other relevant documents regarding the Merger filed with the SEC when they become available.

Item 5.02(e). Compensatory Arrangements of Certain Officers.

On September 25, 2017, Lawrence R. Miller, the Chief Executive Officer of the Company, entered into an amendment to his Amended and Restated Employment Agreement with the Company and the Bank that will become effective upon the consummation of the Mergers. This amendment provides that Mr. Miller’s Amended and Restated Employment Agreement may be terminated effective immediately following a change of control, but that (subject to payment of severance) a one-year restrictive covenant term would then apply following such change of control.

The above is a summary of the amendment to the Amended and Restated Employment Agreement and is qualified by reference in its entirety to this amendment, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

On September 25, 2017, Martha L. Long, the Chief Financial Officer of the Company, and E. Fred Moore, the Chief Credit Officer of the Company, each entered into an a non-solicitation agreement with First Reliance that will prohibit them from recruiting employees and soliciting customers of First Reliance until the later of two years after the Merger or one year following the termination of their service as an employee or consultant of First Reliance Bank. They will both also be subject to confidentiality obligations during this term, which will become effective upon the consummation of the Mergers.

The above are summaries of the Non-Solicitation Agreements with Ms. Long and Mr. Moore and are qualified by reference in their entirety to the agreements, which are attached hereto as Exhibits 10.2 and 10.3, respectively, and incorporated herein by reference.