Item 1.01
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Entry into a Material Definitive Agreement.
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Amendment to Stock Purchase Agreement
Overview of Amendment
On
May 26, 2017, FB Financial Corporation, a Tennessee Corporation (the Company), and its wholly-owned banking subsidiary, FirstBank, entered into an amendment (the Amendment) to that certain Stock Purchase Agreement (the
Purchase Agreement), dated as of February 8, 2017, by and among the Company, FirstBank, Clayton HC, Inc., a Tennessee Corporation (Seller), Clayton Bank & Trust, a Tennessee state bank and wholly-owned
subsidiary of Seller (CBT), American City Bank, a Tennessee state bank and wholly-owned subsidiary of Seller (ACB, and together with CBT, the Clayton Banks), and Mr. James L. Clayton, the principal
shareholder of Seller (Clayton), providing for the acquisition by FirstBank of all of the issued and outstanding shares of the Clayton Banks (the Clayton Banks Acquisition) from the Seller. Following the consummation of the
Clayton Banks Acquisition, the Clayton Banks will merge with and into FirstBank, with FirstBank continuing as the surviving banking corporation.
The Amendment was entered into by the parties to address competitive concerns raised by the Federal Reserve Board related to the Sellers
post-closing ownership of the Companys shares and continued ownership of 50% of Apex Bancorp, Inc., the bank holding company for Apex Bank, a bank headquartered in Camden, Tennessee.
Amendment to Acquisition Consideration
The Amendment (1) reduces the number of shares of the Companys common stock to be received by Seller as partial consideration for
the Clayton Banks Acquisition from 5,860,000 shares to 1,521,200 shares (the Stock Consideration), and (2) provides for a cash payment by the Company to Seller equal to $124,200,000 (the Cash Consideration). The
Amendment also obligates the Company to conduct an offering of its common stock to fund the payment of the Cash Consideration and conditions the consummation of the Acquisition upon the successful completion of such an offering. As a result of the
reduction of the Stock Consideration and after giving effect to the issuance of the Stock Consideration and the sale of the Private Placement Shares (as described and defined below), the Seller will own approximately 4.99% of the Companys
outstanding shares of common stock.
The Amendment also permits FirstBank to reduce the principal amount of the $60 million subordinated
note to be issued to the Seller at the closing by paying all or a portion of such principal amount in cash at FirstBanks discretion.
The Amendment does not change the pre-closing distributions to be made from the Clayton Banks to the Seller under the Purchase Agreement,
which include (1) the distribution of excess capital of the Clayton Banks in the amount of $79,500,000 to the Seller at the closing (the Excess Capital Payment), with FirstBank paying any shortfall in the event that the Clayton
Banks are restricted from making the entire Excess Capital Payment to the Seller due to regulatory restrictions or applicable liquidity policies, (2) the distribution of certain specified assets, with a book value of approximately $4.8 million,
and (3) cash distributions in amounts intended to cover the Sellers S corporation tax liabilities attributable to the earnings of the Clayton Banks for the period prior to the closing.
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Additional Amendments
The Amendment also provides that Clayton will no longer have the ability to designate one director to the Companys Board of Directors
following the closing of the Clayton Banks Acquisition and, as a result, the Companys existing shareholders agreement will no longer be amended or restated following the closing of the Clayton Banks Acquisition.
While the Company continues to expect to close the Clayton Banks Acquisition in the third quarter of 2017, the closing of the Clayton Banks
Acquisition remains subject to the satisfaction of numerous closing conditions, including without limitation, (i) receipt of all required regulatory approvals from the Federal Reserve, FDIC and the Tennessee Department of Financial
Institutions, (ii) approval by the Companys shareholders of the issuance of the Stock Consideration, if required by the NYSE, and (iii) the absence of any law, order, injunction, decree, judgment or ruling prohibiting the Clayton
Banks Acquisition.
The foregoing summary of the Amendment does not purport to be complete and is qualified in its entirety by reference
to the complete text of the Amendment, which is attached hereto as Exhibit 2.1 and is incorporated herein by this reference.
Private Placement of
Common Stock
On May 26, 2017, the Company entered into Securities Purchase Agreements (the Securities Purchase
Agreements) with accredited investors (the Purchasers) pursuant to which the Company agreed to sell in a private placement (the Private Placement) an aggregate of 4,806,710 shares of the Companys common stock, par
value $1.00 (the Private Placement Shares), at a purchase price of $33.00 per share. The gross proceeds of the sale of such Private Placement Shares will be approximately $158.6 million. Keefe, Bruyette & Woods, Inc.
and Stephens, Inc. served as the joint book-running managers for the Private Placement, and Raymond James & Associates, Inc and Sandler ONeill + Partners, L.P. and served as the co-managers for the Private Placement. The Private
Placement is expected to close on June 1, 2017, and is not conditioned on the closing of the Clayton Banks Acquisition.
Consummation
of the sale of the Private Placement Shares under the Securities Purchase Agreements is subject to the satisfaction of certain customary closing conditions. The Securities Purchase Agreements also contain representations and warranties, covenants
and indemnification provisions that are customary for private placements of shares of common stock by companies with shares of common stock listed for trading on a national securities exchange.
The estimated net proceeds of approximately $152 million from the sale of the Private Placement Shares will be used to fund the payment of the
$124.2 million Cash Consideration to be paid to the Seller pursuant to the Amendment and the remaining net proceeds will be used for general corporate purposes, which may include paying down the $60 million subordinated note to be issued to the
Seller pursuant to the Amendment. In the event that the Clayton Banks Acquisition is not consummated, the proceeds from the sale of the Private Placement Shares will be used for general corporate purposes, which may include funding future
acquisitions and strengthening the Companys and FirstBanks capital position.
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The Private Placement Shares have not been registered under the Securities Act of 1933, as
amended (the Securities Act), in reliance on the exemption from registration in Section 4(a)(2) of the Securities Act and Regulation D of the U.S. Securities and Exchange Commission (the SEC) promulgated under the
Securities Act, and, as a result, the Private Placement Shares may not be offered or sold in the United States absent a registration statement or exemption from registration. Pursuant to the Securities Purchase Agreements, the Company has agreed to
file with the SEC a registration statement with respect to the resale of the Private Placement Shares purchased by the Purchasers under the Securities Purchase Agreements by no later than by June 21, 2017 and to have such registration statement
declared effective by the SEC by no later than (i) July 16, 2017 in the event the SEC does not review such registration statement, if earlier, five business days after a determination by the SEC that it will not review such registration
statement, or (ii) September 29, 2017 in the event the SEC does review such registration statement, or if earlier, five business days after the completion of any review by the SEC. In the event that the Company does not file such
registration statement or cause such registration statement to become effective by the applicable deadline or after such registration statement becomes effective it is suspended or ceases to be effective, then the Company will be required to make
certain payments as liquidated damages to the Purchasers under the Securities Purchase Agreements.
The foregoing summary of the
Securities Purchase Agreements does not purport to be complete and is qualified in its entirety by reference to the complete text of the Form of Securities Purchase Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by
this reference.