NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 24, 2022
To the Shareholders of Spirit
of Texas Bancshares, Inc.:
Notice
is hereby given that Spirit of Texas Bancshares, Inc., which we refer to as Spirit, will hold a special meeting of holders of
common stock, no par value per share, of Spirit, which we refer to as the Spirit special meeting, on February 24, 2022,
at 12:00 pm Central Time.
The Spirit
special meeting will be held in a virtual meeting format only. You will not be able to physically attend the Spirit special meeting.
You are
invited to attend and vote your shares via live webcast. In order to attend the Spirit special meeting, you must register at
www.proxydocs.com/STXB by 12:00 pm Central Time on February 23, 2022. You will be asked to provide
the control number located inside the shaded gray box on your proxy as described in the proxy. After completion of your registration,
further instructions, including a unique link to access the Spirit special meeting, will be emailed to you.
The Spirit
special meeting will be held for the purposes of allowing holders of common stock, no par value per share, of Spirit, which we
refer to as the Spirit shareholders, to consider and vote upon the following matters:
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a
proposal to approve the Agreement and Plan of Merger, dated as of November 18, 2021,
which we refer to as the merger agreement, by and between Simmons First National Corporation,
which we refer to as Simmons, and Spirit, pursuant to which, among other things, Spirit
will merge with and into Simmons, with Simmons continuing as the surviving corporation,
which we refer to as the merger, as more fully described in the attached proxy statement/prospectus,
which we refer to as the merger proposal;
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a
proposal to approve, on an advisory (non-binding) basis, specified compensation that
may become payable to the named executive officers of Spirit in connection with the merger,
which we refer to as the advisory proposal on specified compensation; and
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a
proposal to approve one or more adjournments of the Spirit special meeting, if necessary
or appropriate, to solicit additional proxies in favor of approval of the merger proposal,
which we refer to as the adjournment proposal.
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These
proposals are described in greater detail in the accompanying proxy statement/prospectus. Spirit will transact no other business
at the Spirit special meeting, except for the business properly brought before the Spirit special meeting or any adjournment or
postponement thereof.
Spirit has
fixed the close of business on January 14, 2022 as the record date for the Spirit special meeting. Only Spirit
shareholders of record at that time are entitled to notice of, and to vote at, the Spirit special meeting, or any adjournment
or postponement thereof. Approval of the merger proposal requires the affirmative vote of holders of at least a majority of
the outstanding shares of Spirit common stock entitled to vote on the merger proposal. Approval of the advisory proposal on
specified compensation and the adjournment proposal require the affirmative vote of holders of at least a majority of the
shares of Spirit common stock present or represented by proxy at the Spirit special meeting and entitled to vote on the
advisory proposal on specified compensation and the adjournment proposal, respectively. At the close of business on the
record date, 17,288,547 shares of Spirit common stock were outstanding and entitled to vote.
Your
vote is very important. Simmons and Spirit cannot complete the merger unless Spirit shareholders approve the merger agreement.
To
ensure your representation at the Spirit special meeting, please complete, sign, date and return the enclosed proxy by following
the instructions on your proxy (or submit your proxy by telephone or through the internet). If your shares of Spirit common stock
are held in “street name” through a bank, broker or other nominee, you must direct your bank, broker or nominee how
to vote in accordance with the instructions you received from your bank, broker or nominee. You may not vote shares held in “street
name” by returning a proxy directly to Spirit or virtually at the Spirit special meeting unless you provide a “legal
proxy,” which you must obtain from your bank, broker or other nominee. Whether or not you expect to attend the Spirit special
meeting, please vote promptly. Sending in your proxy now will not prevent you from voting your shares virtually at the Spirit
special meeting, since you may revoke your proxy at any time before it is voted.
Under
Texas law, Spirit shareholders who do not vote in favor of the merger proposal and follow certain procedural steps will be entitled
to dissenters’ rights. See “Questions and Answers—Are Spirit shareholders entitled to dissenters’ rights?”
The enclosed
proxy statement/prospectus provides a detailed description of the Spirit special meeting, the merger, the merger agreement, the
documents related to the merger, and other related matters. We urge you to read the proxy statement/prospectus, including any
documents incorporated in the proxy statement/prospectus by reference, and its annexes, carefully and in their entirety.
The
Spirit board of directors unanimously approved the merger agreement and the transactions contemplated thereby and recommends that
Spirit shareholders vote “FOR” approval of the merger agreement, “FOR” the advisory proposal on specified
compensation and, if necessary or appropriate, “FOR” the adjournment proposal.
BY ORDER OF THE BOARD OF
DIRECTORS
Dean O. Bass
Chairman and Chief Executive Officer
Conroe, TX
January 20,
2022
ADDITIONAL
INFORMATION
This proxy
statement/prospectus incorporates important business and financial information about Simmons and Spirit from documents filed with
the Securities and Exchange Commission, which we refer to as the SEC, that are not included in or delivered with this proxy statement/prospectus.
You can obtain any of the documents filed with or furnished to the SEC by Simmons and Spirit at no cost from the SEC’s website
at www.sec.gov. You are also able to obtain these documents, free of charge, from Simmons at www.simmonsbank.com and from Spirit
at www.sotb.com. The websites listed above are inactive textual references only and the information provided on these websites
is not a part of the accompanying proxy statement/prospectus and therefore is not incorporated by reference into the accompanying
proxy statement/prospectus. You may also request copies of these documents concerning Simmons or Spirit, including documents incorporated
by reference in this proxy statement/prospectus, at no cost by contacting Simmons or Spirit, as applicable, at the following addresses:
Simmons
First National Corporation
601 E.
3rd Street, 12th Floor
Little Rock, Arkansas 72201
Attention: Ed Bilek
Telephone: (870) 541-1000
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Spirit
of Texas Bancshares, Inc.
1836
Spirit of Texas Way
Conroe,
Texas 77301
Attention:
Jerry D. Golemon
Telephone:
(936) 521-1836
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If you
are a Spirit shareholder and have any questions concerning the Spirit special meeting, the merger, the merger agreement or the
proxy statement/prospectus, would like additional copies of the proxy statement/prospectus without charge or need help voting
your shares of Spirit common stock, please contact Spirit at the address above.
These
documents are available without charge upon written or oral request. To obtain timely delivery of these documents, you must request
them no later than February 16, 2022 in order to receive them before the Spirit special meeting.
No one has been
authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document.
This document is dated January 20, 2022 and you should assume that the information in this document is accurate only as of such
date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document.
Neither the mailing of this document to Spirit shareholders nor the issuance by Simmons of shares of Simmons common stock in connection
with the merger will create any implication to the contrary.
For a
more detailed description of the information incorporated by reference into the accompanying proxy statement/prospectus and how
you may obtain it, see the section entitled “Where You Can Find More Information” for more details.
This
document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a
proxy, in any jurisdiction to or from any person to whom or from whom it is unlawful to make any such offer or solicitation in
that jurisdiction. Except where the context otherwise indicates, information contained in this document regarding Simmons has
been provided by Simmons and information contained in this document regarding Spirit has been provided by Spirit.
TABLE
OF CONTENTS
Page
Annex Index
Annex
A:
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Agreement
and Plan of Merger, dated as of November 18, 2021, by and between Simmons First National Corporation and Spirit of Texas Bancshares,
Inc.
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Annex
B:
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Form
of Support and Non-Competition Agreement, by and among Simmons First National Corporation, Spirit of Texas Bancshares, Inc.
and certain directors and shareholders of Spirit of Texas Bancshares, Inc.
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Annex
C:
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Opinion
of Stephens Inc.
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Annex
D:
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Chapter
10, Subchapter H of the Texas Business Organizations Code: Dissenters’ Rights for the Shareholders of Spirit of Texas
Bancshares, Inc.
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QUESTIONS
AND ANSWERS ABOUT THE MERGER AND THE Spirit SPECIAL MEETING
The
following are some questions that you may have regarding the merger and the Spirit special meeting and brief answers to those
questions. We urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section
does not provide all of the information that might be important to you with respect to the merger and the Spirit special meeting.
Additional important information is also contained in the documents incorporated by reference into this proxy statement/prospectus.
See the section entitled “Where You Can Find More Information.” Unless the context otherwise requires, references
in this proxy statement/prospectus to Simmons refer to Simmons First National Corporation, references to Simmons Bank refer to
Simmons Bank, an Arkansas state-chartered bank and wholly owned subsidiary of Simmons, references to Spirit refer to Spirit of
Texas Bancshares, Inc., references to Spirit Bank refer to Spirit of Texas Bank SSB, a state savings bank under the laws of Texas
and wholly owned subsidiary of Spirit, and references to “we,” “our” and “us” refer to Simmons
and Spirit together.
As
described below, it is important to note that the amount of per share merger consideration may increase or decrease due
to changes in the price of Simmons common stock or the fully diluted shares of Spirit common stock outstanding after the date
hereof. As a result, the per share merger consideration shown throughout this proxy statement/prospectus is for illustrative purposes
only based on the assumptions described herein.
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A:
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Simmons
and Spirit have entered into an Agreement and Plan of Merger, dated as of November 18,
2021, which we refer to as the merger agreement, pursuant to which, among other things,
(i) Spirit will merge with and into Simmons, with Simmons continuing as the surviving
corporation, which we refer to as the merger, and (ii) immediately following the merger,
Spirit Bank will merge with and into Simmons Bank, with Simmons Bank continuing as the
surviving bank, which we refer to as the bank merger. A copy of the merger agreement
is attached as Annex A to this proxy statement/prospectus.
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Q:
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Why
am I receiving this proxy statement/prospectus?
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A:
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Spirit
is sending these materials to the holders of common stock, no par value per share, of
Spirit, which we refer to as Spirit common stock, to help holders of Spirit common stock,
which we refer to as Spirit shareholders, decide how to vote their shares with respect
to the matters to be considered at the special meeting of Spirit shareholders, which
we refer to as the Spirit special meeting.
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The
merger cannot be completed unless the Spirit shareholders approve the merger agreement
and the transactions contemplated thereby, including the merger. The proposal to approve
the merger agreement and the transactions contemplated thereby, including the merger,
which we refer to as the merger proposal, requires the affirmative vote of holders of
at least a majority of the outstanding shares of Spirit common stock entitled to vote
on the merger proposal. Spirit is holding a special meeting of Spirit shareholders to
vote on the proposals necessary to complete the merger as well as other related matters.
Information about the Spirit special meeting, the merger and the other business to be
considered by Spirit shareholders at the Spirit special meeting is contained in this
proxy statement/prospectus.
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This
document constitutes both a proxy statement of Spirit and a prospectus of Simmons. It
is a proxy statement because the board of directors of Spirit, which we refer to as the
Spirit board of directors, is using this document to solicit proxies from the Spirit
shareholders. This document is also a prospectus because Simmons, in connection with
the merger, is offering shares of Class A Common Stock, par value $0.01 per share, of
Simmons, which we refer to as Simmons common stock, in exchange for outstanding shares
of Spirit common stock.
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Q:
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What
will Spirit shareholders receive in the merger?
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A:
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Based
on the assumptions set forth below, under the terms of the merger agreement, upon the
consummation of the merger, which we refer to as the effective time, each share of Spirit
common stock that is issued and outstanding immediately prior to the effective time,
excluding certain specified shares, will be converted into the right to receive approximately
1.0105 shares of Simmons common stock, subject to certain conditions and potential
adjustments (including substituting cash for Simmons common stock to the extent necessary
to cash out Spirit’s stock options and warrants that are outstanding immediately
prior to the effective time, which such amount of cash we refer to as the aggregate cash
consideration), with the precise number of shares to be determined at the effective time,
such number of shares we refer to as the exchange ratio or the per share merger consideration.
The per share merger consideration is based on the assumption that (i) 17,261,959
shares of Spirit common stock are issued and outstanding (excluding treasury shares),
(ii) 435,676 shares of Spirit common stock are reserved for issuance upon the
vesting of the restricted stock units of Spirit, which we refer to as the Spirit RSUs,
(iii) 780,230 shares of Spirit common stock are subject to outstanding stock options
of Spirit with a weighted average exercise price of $14.65, and (iv) 15,312
shares of Spirit common stock are subject to outstanding warrants of Spirit with
a weighted average exercise price of $12.84, in each case, immediately prior to
the effective time. In addition, the exchange ratio assumes that the Simmons average
closing price, as described herein, is equal to $32.08, which was the closing
sales price of Simmons common stock on January 7, 2022. Changes in any of these
assumptions will result in changes in the per share merger consideration. In the aggregate
and based on the assumptions set forth in this paragraph, Simmons will issue approximately
17,883,538 shares of Simmons common stock to the Spirit shareholders upon completion
of the merger, subject to certain conditions and potential adjustments under the merger
agreement, which we refer to as the aggregate merger consideration.
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Simmons
will not issue any fractional shares of Simmons common stock in the merger. Instead,
a Spirit shareholder who would otherwise be entitled to receive a fraction of a share
of Simmons common stock will receive, in lieu thereof, an amount in cash, rounded up
to the nearest whole cent (without interest), determined by multiplying (i) the fraction
of a share (rounded to the nearest thousandth when expressed as a decimal form) of Simmons
common stock that such holder would otherwise be entitled to receive by (ii) the average
of the daily closing prices for the shares of Simmons common stock for the twenty consecutive
full trading days on which such shares are actually traded on Nasdaq ending at the close
of trading on the tenth business day prior to the effective time (or the immediately
preceding day to the tenth business day prior to the effective time if shares of Simmons
common stock are not actually traded on Nasdaq on such day), which we refer to as the
determination date, and which average we refer to as the Simmons average closing price.
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Following
completion of the merger, it is currently expected that former Spirit common shareholders as a group will own approximately 13.7%
of the combined company’s common stock and existing Simmons shareholders as a group will own approximately 86.3%
of the combined company’s common stock.
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Q:
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Will
the value of the per share merger consideration change between the date of this proxy
statement/prospectus and the effective time?
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A:
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Yes.
The market value of the per share merger consideration will fluctuate between the date
of this proxy statement/prospectus and the completion of the merger based on fully diluted
shares of Spirit common stock outstanding and the market value of Simmons common stock.
Any change in the fully diluted shares of Spirit common stock or market price of Simmons
common stock after the date of this proxy statement/prospectus will change the value
of the per share merger consideration that Spirit shareholders will receive.
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There
will be no adjustment to the per share merger consideration based upon changes in the market price of Simmons common stock or
Spirit common stock prior to the time the merger is completed, and the merger agreement cannot be terminated due to a change in
the price of Simmons common stock.
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Q:
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What
will happen to Spirit equity rights in the merger?
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A:
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At
the effective time, each Spirit RSU will fully vest and be canceled and converted into
the right to receive the per share merger consideration, treating the Spirit RSUs as
if they are shares of Spirit common stock for such purposes.
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At
the effective time, each option granted by Spirit to purchase shares of Spirit common
stock under Spirit’s ST Financial Group, Inc. 2008 Stock Plan and Spirit’s
ST Financial Group, Inc. 2017 Stock Incentive Plan (each as amended from time to time),
whether vested or unvested, which we refer to as a Spirit stock option, that is
outstanding and unexercised immediately prior to the effective time, will be canceled
and converted into the right to receive from Simmons a cash payment, which we refer to
as a Spirit stock option payout, equal to the fully diluted per share value (described
below) less the exercise price of a Spirit stock option, which we refer to as the applicable
Spirit stock option amount.
Notwithstanding the foregoing, any Spirit stock option that
is outstanding and unexercised immediately prior to the effective time with an option
exercise price that equals or exceeds the fully diluted per share value will be canceled
with no consideration being paid to the optionholder with respect to such Spirit stock
option.
Simmons and Spirit will work cooperatively to facilitate the Spirit stock option
payouts. Pursuant to the merger agreement, the Spirit board of directors or any committee
thereof, prior to the effective time, must adopt such resolutions or take any actions
necessary to effectuate the Spirit stock option payouts. It is expected that, prior
to the effective time, the Spirit board of directors (or a committee thereof) will accelerate
the vesting of all Spirit stock options and give the holders thereof notice and an opportunity
to exercise their Spirit stock options. This opportunity to exercise will apply to all
outstanding Spirit stock options, including those Spirit stock options for which the vesting is accelerated by Spirit’s board of directors
(or a committee thereof).
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At
the effective time, each warrant granted by Spirit to purchase shares of Spirit common
stock under the Spirit warrant agreements, whether vested or unvested, that is outstanding
and unexercised immediately prior to the effective time, which we refer to as a Spirit
warrant, will be canceled and converted into the right to receive from Simmons a cash
payment, which we refer to as a Spirit warrant payout, equal to the fully diluted per
share value less the exercise price of the Spirit warrant, which we refer to as the applicable
Spirit warrant amount, all in accordance with certain warrant cancellation agreements
by and between Spirit and the holders of the Spirit warrants, which we refer to as the
Spirit warrant holders and which agreements we refer to as the warrant cancellation agreements.
Notwithstanding the foregoing, any Spirit warrant that is outstanding and unexercised
immediately prior to the effective time with an exercise price that equals or exceeds
the fully diluted per share value will be canceled with no consideration being paid to
the Spirit warrant holders with respect to such Spirit warrant. Simmons and Spirit will
work cooperatively to facilitate the Spirit warrant payouts. Pursuant to the merger agreement,
the Spirit board of directors or any committee thereof, prior to the effective time,
must adopt such resolutions or take any actions necessary to effectuate the Spirit warrant
payouts and to ensure there are no outstanding Spirit warrants at the effective time.
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Fully
diluted per share value means, with respect to Spirit, the quotient obtained by dividing
(A) the sum of (i) the aggregate cash consideration, (ii) the product of (x) the aggregate
merger consideration and (y) the Simmons average closing price, (iii) the product of
(x) the total number of Spirit stock options that are outstanding and unexercised
immediately prior to the effective time, and (y) the weighted average exercise price
for such stock options, and (iv) the product obtained by multiplying (x) the weighted
average exercise price of the total number of shares of Spirit common stock underlying
the Spirit warrants as of immediately prior to the effective time by (y) the total number
of shares of Spirit common stock
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underlying
the Spirit warrants as of immediately prior to the effective time, by (B) the sum of
(i) the total number of shares of Spirit common stock and Spirit RSUs outstanding, (ii)
the total number of shares of Spirit common stock underlying the Spirit stock options,
and (iii) the total number of shares of Spirit common stock underlying the Spirit warrants,
each as of immediately prior to the effective time.
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Q:
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When
do you expect to complete the merger?
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A:
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We
expect to complete the merger in the second quarter of 2022. However, we cannot assure
you of when or if the merger will be completed. We must first obtain the approval of
the Spirit shareholders, as well as obtain necessary regulatory approvals and satisfy
certain other closing conditions. For further information, please see the section entitled
“The Merger Agreement—Conditions to Consummation of the Merger.”
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Q:
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What
am I being asked to vote on?
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A:
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The
Spirit special meeting will be held for the purposes of allowing Spirit shareholders,
to consider and vote upon the following matters:
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a
proposal to approve, on an advisory (non-binding) basis, specified compensation that
may become payable to the named executive officers of Spirit in connection with the merger,
which we refer to as the advisory proposal on specified compensation; and
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a
proposal to approve one or more adjournments of the Spirit special meeting, if necessary
or appropriate, to solicit additional proxies in favor of approval of the merger proposal,
which we refer to as the adjournment proposal.
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Q:
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How
does the Spirit board of directors recommend that Spirit shareholders vote at the Spirit
special meeting?
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A:
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The
Spirit board of directors has unanimously approved the merger agreement and recommends
that Spirit shareholders vote “FOR” the merger proposal, “FOR”
the advisory proposal on specified compensation and, if necessary or appropriate, “FOR”
the adjournment proposal.
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Q:
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When
and where is the Spirit special meeting?
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A:
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The
Spirit special meeting will be held on February 24, 2022 at 12:00 pm Central
Time. The Spirit special meeting will be held in a virtual meeting format only. You will
not be able to physically attend the Spirit special meeting.
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You
are invited to attend and vote your shares via live webcast. In order to attend the
Spirit special meeting, you must register at www.proxydocs.com/STXB by 12:00
pm Central Time on February 23, 2022. You will be asked to provide the
control number located inside the shaded gray box on your proxy card as described in
the proxy. After completion of your registration, further instructions, including a unique
link to access the Spirit special meeting, will be emailed to you.
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Q:
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What
constitutes a quorum for the Spirit special meeting?
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A:
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The presence at the Spirit
special meeting, in person or by proxy, of a majority of the shares of Spirit common stock outstanding and entitled to vote as
of the close of business on January 14, 2022 which the Spirit board of directors set as the record date for the Spirit
special meeting, which we refer to as the Spirit
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record
date, will constitute a quorum for the purposes of the Spirit special meeting. All shares
of Spirit common stock represented at the Spirit special meeting or represented by proxy,
including abstentions, if any, will be treated as present for purposes of determining
the presence or absence of a quorum for all matters voted on at the Spirit special meeting.
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Q:
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Who
is entitled to vote?
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A:
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Holders
of record of Spirit common stock at the close of business on January 14, 2022,
the Spirit record date, will be entitled to vote at the Spirit special meeting.
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Q:
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What
is the vote required to approve each proposal at the Spirit special meeting?
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Standard:
Approval of the merger proposal requires the affirmative vote of holders of at least
a majority of the outstanding shares of Spirit common stock entitled to vote on the merger
proposal.
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Effect
of abstentions and broker non-votes: If you mark “ABSTAIN” for the merger
proposal on your proxy, fail to either submit a proxy or vote at the Spirit special meeting,
or are a “street name” holder and fail to instruct your bank, broker or other
nominee how to vote, it will have the same effect as a vote against the merger proposal.
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Advisory
Proposal on Specified Compensation:
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Standard:
Approval of the advisory proposal on specified compensation requires the affirmative
vote of at least a majority of shares of Spirit common stock present or represented by
proxy at the Spirit special meeting and entitled to vote on the adjournment proposal.
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Effect
of abstentions and broker non-votes: If you mark “ABSTAIN” for the advisory
proposal on specified compensation on your proxy, it will have the same effect as a vote
against such proposal, and if you fail to either submit a proxy or vote at the Spirit
special meeting, or are a “street name” holder and fail to instruct your
bank, broker or other nominee how to vote, it will have no effect on such proposal.
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Standard:
Approval of the adjournment proposal requires the affirmative vote of at least a majority
of shares of Spirit common stock present or represented by proxy at the Spirit special
meeting and entitled to vote on the adjournment proposal.
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Effect
of abstentions and broker non-votes: If you mark “ABSTAIN” for the adjournment
proposal on your proxy, it will have the same effect as a vote against such proposal,
and if you fail to either submit a proxy or vote at the Spirit special meeting, or are
a “street name” holder and fail to instruct your bank, broker or other nominee
how to vote, it will have no effect on such proposal.
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Q:
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Are
there any voting agreements with existing Spirit shareholders?
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A:
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In connection with entering
into the merger agreement, each member of the Spirit board of directors and Spirit’s named executive officers, in their
capacities as individuals, have separately entered into a support and non-competition agreement, which we refer to as a Spirit
voting agreement, pursuant to which they agreed to vote their beneficially owned shares of Spirit common stock in favor of the
merger proposal and
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certain
related matters and against alternative transactions. As of the Spirit record date, shares
constituting approximately 24.7% of the Spirit common stock entitled to vote at
the Spirit special meeting are subject to Spirit voting agreements. For further information,
please see the section entitled “The Merger Agreement—Voting Agreements.”
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Q:
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Why
is my vote important?
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A:
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If
you do not vote, it will be more difficult for Spirit to obtain the necessary quorum
to hold the Spirit special meeting. Additionally, each proposal must be approved by the
voting requirements described above. The Spirit board of directors recommends that Spirit
shareholders vote “FOR” the merger proposal, “FOR”
the advisory proposal on specified compensation and, if necessary or appropriate, “FOR”
the adjournment proposal.
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Q:
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How
many votes do I have?
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A:
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Each
holder of shares of Spirit common stock outstanding on the Spirit record date will be
entitled to one vote for each share held of record. As of the Spirit record date, there
were 17,288,547 shares of Spirit common stock outstanding and entitled to notice
of, and to vote at, the Spirit special meeting, held by approximately 296
shareholders of record.
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As
of the Spirit record date, the directors and executive officers of Spirit and their affiliates
beneficially owned and were entitled to vote approximately 4,378,883 shares
of Spirit common stock, representing approximately 25.3% of shares of Spirit
common stock outstanding on that date.
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Q:
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What
do I need to do now?
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A:
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After
carefully reading and considering the information contained in this proxy statement/prospectus,
including any documents incorporated in this proxy statement/prospectus by reference,
and its annexes, Spirit shareholders should complete, sign, date and return the enclosed
proxy by following the instructions on your proxy (or submit your proxy by telephone
or through the internet). If your shares of Spirit common stock are held in “street
name” by a bank, broker or other nominee, please follow the instructions on the
voting instruction form provided by the record holder. Whether or not you expect to attend
the Spirit special meeting, please vote promptly. Sending in your proxy now will not
prevent you from voting your shares virtually at the Spirit special meeting, since you
may revoke your proxy at any time before it is voted.
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A:
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If
you hold your shares of Spirit common stock in your name as a shareholder of record as
of the Spirit record date, you should follow the instructions on the proxy card and vote
your shares by one of the following methods:
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via
the Internet at www.proxypush.com/STXB;
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by
telephone by calling 1-866-437-1228;
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by
mail by completing, signing, dating and returning the enclosed proxy in the enclosed
envelope, which requires no additional postage if mailed in the United States; or
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by
attending the Spirit special meeting and voting your shares via live webcast.
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If
your shares of Spirit common stock are held in “street name” through a bank,
broker or other nominee, you must direct your bank, broker or nominee how to vote in
accordance with the instructions you received from your bank, broker or nominee. You
may not vote shares held in “street name” by returning a proxy directly to
Spirit or virtually at the Spirit special meeting unless you provide a “legal proxy,”
which you must obtain from your bank, broker or other nominee.
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Q:
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If
my shares of Spirit common stock are held in “street name” by my bank, broker
or other nominee, will my bank, broker or other nominee automatically vote my shares
for me?
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A:
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No.
If your shares of Spirit common stock are held in “street name” through a
bank, broker or other nominee, you must provide the record holder of your shares with
instructions on how to vote your shares. Banks, brokers and other nominees who hold shares
of Spirit common stock in “street name” for a beneficial owner of those shares
typically have the authority to vote in their discretion on “routine” proposals
when they have not received instructions from beneficial owners. However, banks, brokers
and other nominees are not allowed to exercise voting discretion with respect to the
approval of matters determined to be “non-routine,” without specific instructions
from the beneficial owner. Spirit expects that all proposals to be voted on at the Spirit
special meeting will be “non-routine” matters. Broker non-votes are shares
held by a bank, broker or other nominee with respect to which such entity is not instructed
by the beneficial owner of such shares to vote on the particular proposal and the broker
does not have discretionary voting power on such proposal. If your bank, broker or other
nominee holds your shares of Spirit common stock in “street name,” such entity
will vote your shares of Spirit common stock only if you provide instructions on how
to vote by complying with the voter instruction form sent to you by your bank, broker
or other nominee with this proxy statement/prospectus.
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If
you are a Spirit shareholder and you do not instruct your bank, broker or other nominee
on how to vote your shares:
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·
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your
bank, broker or other nominee may not vote your shares on the merger proposal, which
broker non-votes will have the same effect as a vote against such proposal;
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·
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your
bank, broker or other nominee may not vote your shares on the advisory proposal on specified
compensation, which broker non-votes will have no effect on such proposal;
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your
bank, broker or other nominee may not vote your shares on the adjournment proposal, which
broker non-votes will have no effect on such proposal.
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|
Q:
|
What
are the deadlines for voting?
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A:
|
If
you hold your shares of Spirit common stock in your name as a shareholder of record as
of the Spirit record date, you must cast your vote before the polls close during the Spirit special meeting on February
24, 2022.
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For
shareholders whose shares are registered in the name of a bank, broker or other nominee,
please consult the voting instructions provided by your bank, broker or other nominee
for information about the deadline for voting by telephone or via the Internet.
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Q:
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What
if I abstain or do not vote?
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A:
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For
purposes of the Spirit special meeting, an abstention occurs when a Spirit shareholder
attends the Spirit special meeting, either in person or represented by proxy, but abstains
from voting on one or more proposals.
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Merger
Proposal: If you mark “ABSTAIN” for the merger proposal on your proxy,
fail to either submit a proxy or vote at the Spirit special meeting, or are a “street
name” holder and fail to instruct your bank, broker or other nominee how to vote,
it will have the same effect as a vote against the merger proposal.
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Advisory
Proposal on Specified Compensation: If you mark “ABSTAIN” for the advisory
proposal on specified compensation on your proxy, it will have the same effect as a vote
against such proposal, and if you fail to either submit a proxy or vote at the Spirit
special meeting, or are a “street name” holder and fail to instruct your
bank, broker or other nominee how to vote, it will have no effect on such proposal.
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Adjournment
Proposal: If you mark “ABSTAIN” for the adjournment proposal on your
proxy, it will have the same effect as a vote against such proposal, and if you fail
to either submit a proxy or vote at the Spirit special meeting, or are a “street
name” holder and fail to instruct your bank, broker or other nominee how to vote,
it will have no effect on such proposal.
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Q:
|
What
will happen if I return my proxy without indicating how to vote?
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A:
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If
any duly executed proxy is returned by a Spirit shareholder of record without indication
as to how to vote, the shares of Spirit common stock represented by the proxy will be
voted in favor of each of the merger proposal, the advisory proposal on specified compensation
and, if necessary or appropriate, the adjournment proposal.
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Q:
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May
I change my vote after I have delivered my proxy?
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A:
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Yes.
If you hold stock in your name as a Spirit shareholder of record, you may change your
vote or revoke any proxy at any time before the polls are closed at the Spirit
special meeting by:
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completing,
signing, dating and returning a proxy with a later date than your original proxy,
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delivering
a written revocation letter to Spirit’s corporate secretary,
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submitting
a vote by telephone or by logging onto the Internet website specified on your proxy in
the same manner you would to submit your proxy electronically and following the instructions
indicated on the proxy (in either case before the voting deadline),
or
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attending
the Spirit special meeting virtually, notifying Spirit’s corporate secretary
that you are revoking your proxy and voting by ballot at the Spirit special meeting.
If you choose to send a completed proxy bearing a later date than your original proxy,
the new proxy must be received before polls are closed at the Spirit special meeting.
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If
your shares of Spirit common stock are held in “street name” through a bank, broker or other nominee, you should follow
the instructions of your bank, broker or other nominee regarding the revocation of voting instructions.
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Q:
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Are
Spirit shareholders entitled to dissenters’ rights?
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A:
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Spirit
shareholders who do not vote in favor of the merger proposal and follow certain procedural
steps will be entitled to dissenters’ rights under Chapter 10, Subchapter H of
the Texas Business Organizations Code, which we refer to as the TBOC. For additional
information, see “The Merger—Dissenters’ Rights in the Merger.”
In addition, a copy of Chapter 10, Subchapter H of the TBOC is attached as Annex D
to this proxy statement/prospectus.
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Q:
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What
are the material U.S. federal income tax consequences of the merger to Spirit shareholders?
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A:
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The merger is intended to
qualify as “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended,
which we refer to as the Code. If the merger so qualifies, a U.S. holder of Spirit common stock receiving cash in lieu of a fractional
share of Simmons common stock generally will recognize gain or loss equal to the difference between the amount of cash received
instead of a fractional share and the basis in its shares of Simmons common stock allocable to such fractional share.
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For
further information, see “Material U.S. Federal Income Tax Consequences Relating
to the Merger.”
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The
U.S. federal income tax consequences described above may not apply to all holders of
Spirit common stock. Your tax consequences will depend on your individual situation.
Accordingly, we strongly urge you to consult your independent tax advisor for a full
understanding of the particular tax consequences of the merger to you.
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Q:
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If
I am a Spirit shareholder, should I send in my stock certificates now?
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A:
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No.
Spirit shareholders SHOULD NOT send in any Spirit common stock certificates now.
If the merger proposal is approved by Spirit shareholders, transmittal materials with
instructions for their completion will be provided to Spirit shareholders after the effective
time and under separate cover and the stock certificates should be sent at that time.
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Q:
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Whom
may I contact if I cannot locate my Spirit stock certificate(s)?
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A:
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If
you cannot locate your Spirit stock certificate(s), please contact Jerry D. Golemon at
(281) 516-4904 or Shareholder Services at Computershare at (800) 962-4284.
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Q:
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What
should I do if I receive more than one set of voting materials?
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A:
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Spirit
shareholders may receive more than one set of voting materials, including multiple copies
of this proxy statement/prospectus and multiple proxies or voting instruction forms.
For example, if you hold shares of Spirit common stock in more than one brokerage account,
you will receive a separate voting instruction form for each brokerage account in which
you hold such shares. If you are a Spirit shareholder and your shares are registered
in more than one name, you will receive more than one proxy. Please complete, sign, date
and return each proxy and voting instruction form that you receive or otherwise follow
the voting instructions set forth in this proxy statement/prospectus to ensure that you
vote every share of Spirit common stock that you own.
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Q:
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What
happens if I sell my shares of Spirit common stock after the Spirit record date but before
the Spirit special meeting?
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A:
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The
Spirit record date is earlier than the date of the Spirit special meeting and the date
that the merger is expected to be completed. If you transfer your shares of Spirit common
stock after the Spirit record date but before the date of the Spirit special meeting,
you will retain your right to vote at such meeting (provided that such shares remain
outstanding on the date of such meeting), but you will not have the right to receive
any per share merger consideration for the transferred shares of Spirit common stock.
You will only be entitled to receive the per share merger consideration in respect of
shares of Spirit common stock that you hold at the effective time.
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Q:
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Will
Simmons pay dividends after the merger?
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A:
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Simmons
currently pays a quarterly dividend of $0.18 per share. All dividends on Simmons common
stock are declared at the discretion of the Simmons board of directors. There is no guarantee
that Simmons will continue to pay dividends on its common stock or will continue to pay
dividends at the same rate. For more information, see the section entitled “Market
Price and Dividends.”
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Q:
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Are
there risks involved in undertaking the merger?
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A:
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Yes.
You should read and carefully consider the risk factors set forth in the section entitled
“Risk Factors” beginning on page 25.
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Q:
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What
happens if the merger is not completed?
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A:
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If
the merger is not completed, Spirit shareholders will not receive the per share merger
consideration. Instead, each of Spirit and Simmons will remain an independent company
and shares of Spirit common stock and Simmons common stock will continue to be traded
on Nasdaq.
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Q:
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What
will happen if Spirit shareholders do not approve the advisory proposal on specified
compensation?
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A:
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The
advisory proposal on specified compensation is an advisory proposal and will not be binding
on Spirit or Simmons. Approval of the advisory proposal on specified compensation is
not a condition to completion of the merger. Therefore, if the merger agreement is approved
by the Spirit shareholders and the merger is subsequently completed, the compensation
will still be paid to Spirit’s named executive officers, whether or not the Spirit
shareholders approve the advisory proposal on specified compensation at the Spirit special
meeting.
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|
Q:
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Whom
should I contact if I have questions?
|
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A:
|
If
you need assistance in completing your proxy or have questions regarding the Spirit special
meeting, please contact Jerry D. Golemon at (281) 516-4904 or Shareholder Services at
Computershare at (800) 962-4284.
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Q:
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Where
can I find more information about Simmons and Spirit?
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A:
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You
can find more information about Simmons and Spirit from the various sources described
under the section entitled “Where You Can Find More Information.”
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SUMMARY
The
following summary highlights selected information in this proxy statement/prospectus and may not contain all the information that
may be important to you. You should read carefully this entire proxy statement/prospectus, including any document incorporated
by reference in this proxy statement/prospectus, and its annexes, because this section may not contain all of the information
that may be important to you in determining how to vote. For a description of, and instructions as to how to obtain, this information,
see the section entitled “Where You Can Find More Information.” Each item in this summary refers to the page of this
proxy statement/prospectus on which that subject is discussed in more detail.
The Companies (page 40)
Simmons First National Corporation
501 Main Street
Pine Bluff, Arkansas 71601
Telephone: (870) 541-1000
Simmons
is a financial holding company registered under the Bank Holding Company Act, which we refer to as the BHC Act. Simmons is headquartered
in Arkansas and as of September 30, 2021, had, on a consolidated basis, total assets of $23.2 billion, total net loans of $10.6
billion, total deposits of $18.1 billion and total shareholders’ equity of $3.0 billion. Simmons conducts its banking operations
through its subsidiary bank, Simmons Bank, in more than 200 financial centers as of September 30, 2021, located throughout market
areas in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. Simmons common stock is traded on the Nasdaq Global Select
Market, which we refer to as Nasdaq, under the symbol “SFNC.”
Additional
information about Simmons and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus.
See the section entitled “Where You Can Find More Information.”
Spirit of Texas Bancshares, Inc.
1836 Spirit of Texas Way
Conroe, Texas 77301
(936) 521-1836
Spirit
is a Texas corporation and a registered bank holding company located in the Houston metropolitan area with headquarters in Conroe,
Texas. Spirit offers a broad range of commercial and retail banking services through its wholly-owned bank subsidiary, Spirit
Bank.
Spirit
is a business-focused bank that delivers relationship-driven financial services to small and medium-sized businesses and individuals
in its market areas. Spirit’s philosophy is to target commercial customers whose businesses generate between $3 to $30 million
of annual revenue. Spirit’s product offerings consist of a wide range of commercial products, including term loans and operating
lines of credit to commercial and industrial companies; commercial real estate loans; construction and development loans; SBA
loans; commercial deposit accounts; and treasury management services. In addition, Spirit’s retail offerings include consumer
loans, 1-4 single family residential real estate loans and retail deposit products. Spirit common stock is traded
on Nasdaq under the symbol “STXB.”
Additional information
about Spirit and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus. See the
section entitled “Where You Can Find More Information.”
The Merger (page
42)
The terms
and conditions of the merger are contained in the merger agreement, which is attached to this proxy statement/prospectus as Annex
A. We urge you to read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.
All descriptions in this summary and elsewhere in this proxy statement/prospectus of the terms and conditions of the merger are
subject to, and qualified in their entirety by reference to, the merger agreement.
Each of
the Simmons board of directors and the Spirit board of directors approved the merger agreement. The merger agreement provides
that, among other things, (i) Spirit will merge with and into Simmons, with Simmons continuing as the surviving corporation in
the merger, and (ii) immediately following the merger, Spirit Bank will merge with and into Simmons Bank, with Simmons Bank continuing
as the surviving bank.
Based
on the assumptions set forth below, under the terms of the merger agreement, at the effective time, each share of Spirit common
stock that is issued and outstanding immediately prior to the effective time, excluding certain specified shares, will be converted
into the right to receive the per share merger consideration, subject to certain conditions and potential adjustments (including
substituting cash for Simmons common stock to the extent necessary to cash out Spirit’s stock options and warrants that
are outstanding immediately prior to the effective time). The per share merger consideration is based on the assumption that (i)
17,261,959 shares of Spirit common stock are issued and outstanding (excluding treasury shares), (ii) 435,676 shares
of Spirit common stock are reserved for issuance upon the vesting of Spirit RSUs, (iii) 780,230 shares of Spirit common
stock are subject to outstanding Spirit stock options with a weighted average exercise price of $14.65, and (iv) 15,312
shares of Spirit common stock are subject to outstanding Spirit warrants with a weighted average exercise price of $12.84,
in each case, immediately prior to the effective time. In addition, the exchange ratio assumes that the Simmons average closing
price is equal to $32.08, which was the closing sales price of Simmons common stock on January 7, 2022. Changes
in any of these assumptions will result in changes in the per share merger consideration. In the aggregate and based on the assumptions
set forth herein, Simmons will issue approximately 17,883,538 shares of Simmons common stock to the Spirit shareholders
upon completion of the merger, subject to certain conditions and potential adjustments under the merger agreement.
Simmons
will not issue any fractional shares of Simmons common stock in the merger. Instead, a Spirit shareholder who would otherwise
be entitled to receive a fraction of a share of Simmons common stock will receive, in lieu thereof, an amount in cash, rounded
up to the nearest whole cent (without interest), determined by multiplying (i) the fraction of a share (rounded to the nearest
thousandth when expressed as a decimal form) of Simmons common stock that such holder would otherwise be entitled to receive by
(ii) the Simmons average closing price.
Treatment of Spirit
Equity Rights (page 77)
At
the effective time, each Spirit RSU will fully vest and be canceled and converted into the right to receive the per share merger
consideration, treating the Spirit RSUs as if they are shares of Spirit common stock for such purposes.
At the effective
time of the merger, each Spirit stock option that is outstanding and unexercised immediately prior to the effective time
will be canceled and converted into the right to receive from Simmons a Spirit stock option payout, equal to the applicable Spirit
stock option amount. Notwithstanding the foregoing, any Spirit stock option that is outstanding and unexercised immediately
prior to the effective time with an option exercise price that equals or exceeds the fully diluted per share value will be
canceled with no consideration being paid to the optionholder with respect to such Spirit stock option. Simmons and Spirit will
work cooperatively to facilitate the Spirit stock option payouts. Pursuant to the merger agreement, the Spirit board of directors
or any committee thereof, prior to the effective time, must adopt such resolutions or take any actions necessary to effectuate
the
Spirit stock option payouts. It is expected that, prior to the effective time, the Spirit board of directors (or a committee
thereof) will accelerate the vesting of all Spirit stock options and give the holders thereof notice and an opportunity to exercise
their Spirit stock options. This opportunity to exercise will apply to all outstanding Spirit stock options, including those Spirit stock options for which the vesting is accelerated
by Spirit’s board of directors (or a committee thereof).
At the
effective time, each Spirit warrant will be canceled and converted into the right to receive from Simmons a Spirit warrant payout,
equal to the applicable Spirit warrant amount all in accordance with the warrant cancellation agreements. Notwithstanding the
foregoing, any Spirit warrant with a warrant exercise price that equals or exceeds the fully diluted per share value will be canceled
with no consideration being paid to the Spirit warrant holder with respect to such Spirit warrant. Simmons and Spirit will work
cooperatively to facilitate the Spirit warrant payouts. Pursuant to the merger agreement, the Spirit board of directors or any
committee thereof, prior to the effective time, must adopt such resolutions or take any actions necessary to effectuate the Spirit
warrant payouts and to ensure there are no outstanding Spirit warrants at the effective time.
Spirit’s
Reasons for the Merger and Recommendation of the Spirit Board of Directors (page 48)
The Spirit
board of directors has unanimously approved the merger agreement and recommends that Spirit shareholders vote “FOR”
the merger proposal, “FOR” the advisory proposal on specified compensation and, if necessary or appropriate,
“FOR” the adjournment proposal. Please see the section entitled “The Merger—Spirit’s Reasons
for the Merger and Recommendation of the Spirit Board of Directors” for a more detailed discussion of the factors considered
by the Spirit board of directors in reaching its decision to approve the merger agreement and the transactions contemplated thereby.
Opinion of Spirit’s
Financial Advisor (page 52)
In connection
with the merger, Spirit’s financial advisor, Stephens Inc., which we refer to as Stephens, delivered a written opinion, dated November
18, 2021, to the Spirit board of directors as to the fairness of the merger consideration (as described in the section entitled “The
Merger—Opinion of Spirit’s Financial Advisor”) to the Spirit shareholders, from a financial point of view and as of the
date of such opinion and based on and subject to the assumptions, procedures, factors, qualifications and limitations set forth therein.
The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations
on the review undertaken by Stephens in preparing the opinion, is attached as Annex C to this proxy statement/prospectus.
The
opinion was for the information of, and was directed to, the Spirit board of directors (in its capacity as such) in connection
with its consideration of the financial terms of the merger. The opinion does not address the underlying business decision of
Spirit to engage in the merger or enter into the merger agreement or constitute a recommendation to the Spirit board of directors
in connection with the merger, and it does not constitute a recommendation to any holder of Spirit common stock or any shareholder
of any other entity as to how to vote in connection with the merger or any other matter.
For a
description of Stephens’ opinion, please refer to the section entitled “The Merger—Opinion of Spirit’s
Financial Advisor.”
Simmons’
Reasons for the Merger (page 63)
The Simmons
board of directors adopted the merger agreement. Please see the section entitled “The Merger—Simmons’ Reasons
for the Merger” for a more detailed discussion of the factors considered by the Simmons board of directors in reaching its
decision to adopt the merger agreement, including the merger and all transactions contemplated therein.
The Spirit Special
Meeting (page 33)
The Spirit special
meeting will be held on February 24, 2022 at 12:00 pm Central Time. The Spirit special meeting will be held in a
virtual meeting format only. You will not be able to physically attend the Spirit special meeting.
At the
Spirit special meeting, Spirit shareholders will be asked to consider and vote on the merger proposal, the advisory proposal on
specified compensation and, if necessary or appropriate, the adjournment proposal.
The presence
at the Spirit special meeting, in person or by proxy, of a majority of the shares of Spirit common stock outstanding and entitled
to vote as of the close of business on January 14, 2022 which the Spirit board of directors set as the record date for
the Spirit special meeting will constitute a quorum for the purposes of the Spirit special meeting. All shares of Spirit common
stock represented at the Spirit special meeting or represented by proxy, including abstentions, if any, will be treated as present
for purposes of determining the presence or absence of a quorum for all matters voted on at the Spirit special meeting.
Each holder of
shares of Spirit common stock outstanding on the Spirit record date will be entitled to one vote for each share held of record.
As of the Spirit record date, there were 17,288,547 shares of Spirit common stock outstanding and entitled to notice
of, and to vote at, the Spirit special meeting, held by approximately 296 shareholders of record.
Approval
of the merger proposal requires the affirmative vote of holders of at least a majority of the outstanding shares of Spirit common
stock entitled to vote on the merger proposal. Approval of the advisory proposal on specified compensation and of the adjournment
proposal require the affirmative vote of at least a majority of shares of Spirit common stock present or represented by proxy
at the Spirit special meeting and entitled to vote on the adjournment proposal.
If you
mark “ABSTAIN” for the merger proposal on your proxy, fail to either submit a proxy or vote at the Spirit special
meeting, or are a “street name” holder and fail to instruct your bank, broker or other nominee how to vote, it will
have the same effect as a vote against the merger proposal. If you mark “ABSTAIN” for the advisory proposal on specified
compensation or for the adjournment proposal on your proxy, it will have the same effect as a vote against such proposal, and
if you fail to either submit a proxy or vote at the Spirit special meeting, or are a “street name” holder and fail
to instruct your bank, broker or other nominee how to vote, it will have no effect on such proposal.
Interests of Spirit’s
Directors and Executive Officers in the Merger (page 64)
In considering
the recommendation of the Spirit board of directors, Spirit shareholders should be aware that some of Spirit’s executive
officers and directors have interests in the merger, which may be considered to be different from, or in addition to, the interests
of the Spirit shareholders generally. The Spirit board of directors was aware of these interests and considered them, among other
matters, in reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger
agreement and to recommend that Spirit shareholders vote “FOR” the merger proposal.
These
interests are described in more detail under the section entitled “The Merger—Interests of Spirit’s Directors
and Executive Officers in the Merger.”
Surviving Corporation
Governing Documents, Directors and Officers (page 78)
At the
effective time, the amended and restated articles of incorporation of Simmons, as amended, which we refer to as the Simmons charter,
and the as amended by-laws of Simmons, which we refer to as the Simmons bylaws, in effect immediately prior to the effective time
will be the articles of incorporation and bylaws of the surviving corporation, until the same be duly amended or repealed.
The directors and officers
of Simmons immediately prior to the effective time will serve as the directors and officers of the surviving corporation from and after
the effective time in accordance with the bylaws of the surviving corporation, except that Simmons expects to have Dean Bass, Chairman
and CEO of Spirit, join the Simmons board of directors shortly following the closing of the merger as an independent director.
Regulatory Approvals
Required for the Merger (page 69)
The completion
of the merger is subject to prior receipt of certain approvals and consents required to be obtained from applicable governmental
and regulatory authorities, without materially burdensome conditions or requirements being imposed by any governmental authority
as part of a regulatory approval. These approvals include approval from, among others, the Board of Governors of the Federal Reserve
System, or the Federal Reserve, and state regulatory authorities.
Subject
to the terms of the merger agreement, both Simmons and Spirit have agreed to cooperate with each other and use their reasonable
best efforts to prepare all documentation, to effect all applications, notices, petitions and filings, and to obtain all permits
and consents of all regulatory authorities and third parties that are necessary or advisable to consummate the transactions contemplated
by the merger agreement, including the merger. Simmons and Spirit have filed applications and notifications to obtain the required
regulatory approvals, consents and waivers.
Accounting Treatment
(page 72)
The merger
will be accounted for as an acquisition by Simmons using the acquisition method of accounting in accordance with FASB ASC Topic
805, “Business Combinations.” The result of this is that (1) the recorded assets and liabilities of Simmons will be
carried forward at their recorded amounts, (2) Simmons historical operating results will be unchanged for the prior periods being
reported on, and (3) the assets and liabilities of Spirit will be adjusted to fair value at the date Simmons assumes control of
the combined entity, or the merger date. In addition, all identifiable intangibles will be recorded at fair value and included
as part of the net assets acquired. The amount by which the purchase price, consisting of the value of shares of Simmons stock
to be issued to former Spirit shareholders, and the value of cash and shares of Simmons common stock to be issued to former holders
of Spirit stock options, Spirit warrants and Spirit RSUs, which we refer to collectively as Spirit equity awards, exceeds the
fair value of the net assets including identifiable intangibles of Spirit at the merger date will be reported as goodwill. In
accordance with current accounting guidance, goodwill is not amortized and will be evaluated for impairment at least annually.
Identified intangibles will be amortized over their estimated lives. Further, the acquisition method of accounting results in
the operating results of Spirit being included in the operating results of Simmons from the closing date going forward.
Public Trading
Markets (page 72)
Simmons
common stock is listed on Nasdaq under the symbol “SFNC” and Spirit common stock is listed on Nasdaq under the symbol
“STXB.” Upon completion of the merger, Spirit common stock will be delisted from Nasdaq and thereafter will be deregistered
under the Exchange Act. The Simmons common stock issuable in the merger will be listed on Nasdaq.
Dissenters’
Rights in the Merger (page 72)
Spirit
shareholders who do not vote in favor of the merger proposal and follow certain procedural steps will be entitled to dissenters’
rights under Chapter 10, Subchapter H of the Texas Business Organizations Code, which we refer to as the TBOC. For additional
information, see “The Merger—Dissenters’ Rights in the Merger.” In addition, a copy of Chapter 10, Subchapter
H of the TBOC is attached as Annex D to this proxy statement/prospectus.
Agreement Not
to Solicit Other Offers (page 90)
Spirit
has agreed that it and its subsidiaries will not, and will cause their representatives not to, directly or indirectly:
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·
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solicit,
initiate, encourage (including by providing information or assistance), facilitate or
induce any acquisition proposal (as defined in the section entitled “The Merger
Agreement—Agreement Not to Solicit Other Offers”);
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|
·
|
engage
or participate in any discussions or negotiations regarding, or furnish or cause to be
furnished to any person any confidential or nonpublic information or data with respect
to, or take any other action to facilitate any inquiries or the making of any offer or
proposal that constitutes, or may reasonably be expected to lead to, an acquisition proposal;
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|
·
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adopt,
approve, agree to, accept, endorse or recommend any acquisition proposal;
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|
·
|
approve,
agree to, accept, endorse or recommend, or propose to approve, agree to, accept, endorse
or recommend any acquisition agreement (as defined in the section entitled “The
Merger Agreement—Agreement Not to Solicit Other Offers”) contemplating or
otherwise relating to any acquisition transaction (as defined in the section entitled
“The Merger Agreement—Agreement Not to Solicit Other Offers”); or
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|
·
|
except
as otherwise provided in the merger agreement, otherwise cooperate in any way with, or
assist or participate in, or facilitate or encourage any effort or attempt by any person
to do or seek to do any of the foregoing.
|
If Spirit
or any of its representatives receives an unsolicited, bona fide written acquisition proposal by any person at any time prior
to obtaining the requisite approval of the merger agreement by the Spirit shareholders, which we refer to as the Spirit shareholder
approval, that did not result from or arise in connection with a breach of the merger agreement, Spirit and its representatives
may, prior to (but not after) the Spirit special meeting, take the following actions if the Spirit board of directors (or any
committee thereof) has (i) determined, in its good faith judgment (after consultation with Spirit’s financial advisors and
outside legal counsel), that such acquisition proposal constitutes or would reasonably be expected to lead to a superior proposal
(as defined in the section entitled “The Merger Agreement—Agreement Not to Solicit Other Offers”) and that the
failure to take such actions would be inconsistent with its fiduciary duties under applicable law, and (ii) obtained from such
person an executed confidentiality agreement containing terms at least as restrictive with respect to such person as the terms
of the confidentiality agreement are in each provision with respect to Simmons (and such confidentiality agreement will not provide
such person with any exclusive right to negotiate with Spirit): (a) furnish information to (but only if Spirit will have provided
such information to Simmons prior to furnishing it to any such person), and (b) enter into discussions and negotiations with,
such person and its representatives with respect to such unsolicited, bona fide written acquisition proposal.
Spirit Special
Meeting and Recommendation of the Spirit Board of Directors (page 92)
Spirit
has agreed to hold a meeting of its shareholders as promptly as reasonably practicable after the registration statement of which
this proxy statement/prospectus is a part is declared effective by the SEC for the purpose of obtaining the Spirit shareholder
approval.
Except
as described in the following paragraph, the Spirit board of directors has agreed to unanimously recommend to the Spirit shareholders
the approval of the merger proposal, to include such recommendation in this proxy statement/prospectus and to use its reasonable
best efforts to obtain the Spirit shareholder approval.
Except as described in the following paragraph, Spirit has agreed that
neither the Spirit board of directors nor any committee thereof will (1) withhold, withdraw, qualify or modify such recommendation
in any manner adverse to Simmons, (2) fail to make such recommendation or otherwise submit the merger proposal to the Spirit shareholders
without such recommendation, (3) adopt, approve, agree to, accept, recommend or endorse an acquisition proposal, (4) fail to publicly
and without qualification (i) recommend against any acquisition proposal or (ii) reaffirm the recommendation of the merger proposal
within ten business days (or such fewer number of days remaining prior to the Spirit special meeting) after an acquisition proposal
is made public or any request by Simmons to do so, (5) subject to certain exceptions in the merger agreement, take any action
or make any public statement, filing or release inconsistent with such recommendation, or (6) publicly propose to do any of the
foregoing, which, collectively and individually, we refer to as a change in recommendation.
However,
at any time prior to the Spirit special meeting, the Spirit board of directors may submit the merger agreement without recommendation
if Spirit has received a superior proposal (as defined in “The Merger Agreement—Spirit Special Meeting and Recommendation
of the Spirit Board of Directors”) (after giving effect to any revised offer from Simmons) and the Spirit board of directors
has determined in good faith, after consultation with its financial advisors and outside legal counsel, that it would be inconsistent
with the directors’ fiduciary duties under applicable law to make or continue to make the recommendation to approve the
merger proposal; provided, that the Spirit board of directors may not take such actions unless:
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Spirit
has complied in all material respects with its non-solicit obligations described above;
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Spirit
gives Simmons at least five business days’ notice of its intention to make a change
in recommendation;
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during
such five business day period, Spirit has considered and negotiated, and has caused its
financial advisors and outside legal counsel to, consider and negotiate with Simmons
in good faith (to the extent Simmons desires to so negotiate) regarding any proposals,
adjustments or modifications to the terms and conditions of the merger agreement proposed
by Simmons; and
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the
Spirit board of directors has determined in good faith, after consultation with its financial
advisors and outside legal counsel and considering the results of such negotiations described
above and giving effect to any proposals, amendments or modifications proposed by Simmons
that such superior proposal (as defined in the section entitled “The Merger Agreement—Spirit
Special Meeting and Recommendation of the Spirit Board of Directors”) remains a
superior proposal and that it would nevertheless be inconsistent with the directors’
fiduciary duties under applicable law to make or continue to make the recommendation
to approve the merger proposal.
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Any material
amendment to any acquisition proposal will require a new determination and notice period.
Conditions to
Consummation of the Merger (page 93)
The respective
obligations of each party to consummate the merger and the other transactions contemplated by the merger agreement are subject
to the satisfaction or waiver at or prior to the effective time of the following conditions:
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the
approval of the merger proposal by the Spirit shareholders;
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the receipt of all required
regulatory permits or consents from the Federal Reserve, the Texas Department of Savings and Mortgage Lending, which we refer
to as the TDSML, the Arkansas State Bank Department, which we refer to as the ASBD, the Federal Deposit Insurance Corporation,
which we refer to as the FDIC, and any other regulatory authority, and any other regulatory permits or
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consents
contemplated by the merger agreement the failure of which to obtain would reasonably
be expected to have, either individually or in the aggregate, a material adverse effect
on Simmons and Spirit (considered as a consolidated entity), in each case required to
consummate the transactions contemplated by the merger agreement, including the merger,
and expiration of all related statutory waiting periods, which we collectively refer
to as the requisite regulatory approvals;
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the
absence of any law or order (whether temporary, preliminary or permanent) by any court
or regulatory authority of competent jurisdiction prohibiting, restricting or making
illegal the consummation of the transactions contemplated by the merger agreement (including
the merger);
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the
effectiveness of the registration statement of which this proxy statement/prospectus
is a part under the Securities Act of 1933, as amended, which we refer to as the Securities
Act, and there being no stop order, action, suit, proceeding or investigation by the
Securities and Exchange Commission, which we refer to as the SEC, to suspend the effectiveness
of the registration statement initiated and continuing;
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the
approval of the listing on Nasdaq of the Simmons common stock to be issued pursuant to
the merger, subject to official notice of issuance (if such approval is required by Nasdaq);
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the
receipt by each party of a written opinion of Covington in form reasonably satisfactory
to such parties to the effect that the merger will qualify as a “reorganization”
within the meaning of Section 368(a) of the Code;
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the
accuracy of the representations and warranties of the other party in the merger agreement
as of the date of the merger agreement and as of the effective time, subject to the materiality
standards provided in the merger agreement;
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the
performance by the other party in all material respects of all obligations, agreements
and covenants of such party required to be performed or complied with pursuant to the
merger agreement prior to the effective time; and
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the
receipt of (1) a certificate from the other party to the effect that the two conditions
described immediately above have been satisfied and (2) certified copies of resolutions
duly adopted by the other party’s board of directors and shareholders evidencing
the taking of all corporate action necessary to authorize the execution, delivery and
performance of the merger agreement, and the consummation of the transactions contemplated
thereby, all in such reasonable detail as the other party and its counsel may request.
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In addition,
Simmons’ obligation to consummate the merger and the other transactions contemplated by the merger agreement is subject
to the satisfaction or waiver at or prior to the effective time of the following conditions:
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as reflected in Spirit’s
closing financial statements, Spirit Bank’s (1) delinquent loans do not exceed 0.70% of total loans, (2) non-performing
loans do not exceed 0.60% of total loans, (3) the ratio of non-performing assets to total assets is not in excess of 0.50%, (4)
the ratio of classified assets to Tier 1 capital plus ALLL is not in excess of 9.80%, (5) non-performing assets do not exceed
$12,000,000, (6) classified assets do not exceed $35,000,000 and (7) ALLL to total loans exceeds 0.70%;
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holders
of not more than five percent of the outstanding shares of Spirit common stock having
demanded, properly and in writing, appraisal for such shares under the TBOC;
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as
reflected in Spirit’s closing financial statements, (1) Spirit Bank being “well
capitalized” as defined under applicable law, (2) Spirit Bank having a Tier 1 leverage
ratio of not less than 10.25%, (3) Spirit Bank having a Tier 1 risked-based capital ratio
of not less than 13.00%, (4) Spirit Bank having a total risked-based capital ratio of
not less than 13.50%, (5) Spirit Bank having a common equity Tier 1 ratio of not less
than 13.00%, and (6) Spirit Bank having not received any notification from the TDSML
or FDIC to the effect that the capital of Spirit Bank is insufficient to permit Spirit
Bank to engage in all aspects of its business and its currently proposed businesses without
material restrictions, including the imposition of a burdensome condition (as defined
in the section entitled “The Merger Agreement—Covenants and Agreements”),
which condition we refer to as the regulatory capital condition; provided
that items (2) through (5) of this regulatory capital condition will be waived by Simmons
if the failure to satisfy such conditions is due primarily to the growth of Spirit Bank’s
assets, as determined by Simmons in its reasonable discretion after consultation with
Spirit and Spirit’s legal counsel and financial advisor and considering in good
faith the results of such consultation;
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Spirit
having delivered evidence satisfactory to Simmons in its discretion that certain contracts
have been terminated;
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no
requisite regulatory approval contains, will have resulted in or would reasonably be
expected to result in, the imposition of a burdensome condition as determined by Simmons
in its sole discretion after consultation with Spirit and Spirit’s legal counsel
and financial advisor and considering in good faith the results of such consultation;
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Spirit
will deliver to Simmons a certificate, dated as of the closing date and signed on its
behalf by its chief executive officer and its chief financial officer (and in such reasonable
detail as Simmons and their counsel requests), to the effect that it has fulfilled its
document archiving obligations in all material respects; and
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Spirit will deliver to Simmons
duly executed warrant cancellation agreements from all holders of Spirit warrants.
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We cannot
be certain of when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed in the
second quarter of 2022 or at all. As of the date of this proxy statement/prospectus, we have no reason to believe that any of
these conditions will not be satisfied.
Termination of
the Merger Agreement (page 95)
The merger
agreement may be terminated and the merger abandoned at any time prior to the effective time (notwithstanding the approval of
the merger agreement by Spirit shareholders) by mutual written agreement, or by either party in the following circumstances:
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any
regulatory authority denies a requisite regulatory approval or requests that Simmons,
Spirit or any of their respective affiliates withdraw (other than for technical reasons),
and not be permitted to resubmit within 60 days, any application with request to a requisite
regulatory approval;
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the
Spirit shareholders fail to vote their approval of the merger proposal (taking into account
any adjournment or postponement thereof as required by the merger agreement), which we
refer to as a no-vote termination;
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any
law or order permanently restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated by the merger agreement becomes final and nonappealable,
so long as the party seeking to terminate the merger agreement has used its reasonable
best efforts to contest, appeal and change or remove such denial, law or order;
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the
merger has not been consummated by November 30, 2022, which we refer to as the outside
date, if the failure to consummate the transactions contemplated by the merger agreement
on or before such date is not caused by the terminating party’s breach of the merger
agreement, which we refer to as an outside date termination; or
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if
there was a breach of any of the covenants or agreements or any of the representations
or warranties (or any such representation or warranty ceases to be true) set forth in
the merger agreement on the part of Spirit, in the case of a termination by Simmons,
or Simmons, in the case of a termination by Spirit, which breach or failure to be true,
either individually or in the aggregate with all other breaches by such party (or failures
of such representations or warranties to be true), would constitute, if occurring or
continuing on the closing date, the failure of a Simmons or Spirit condition to closing,
respectively, and is not cured within 45 days following written notice or by its nature
or timing cannot be cured during such period (or such fewer days as remain prior to the
outside date); provided, that the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement contained in the merger agreement,
which we refer to as a breach termination.
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In addition,
Simmons may terminate the merger agreement if:
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the
Spirit board of directors fails to recommend that the Spirit shareholders approve the
merger proposal, effects a change in recommendation, breaches its non-solicitation obligations
with respect to acquisition proposals in any material respect adverse to Simmons or fails
to call, give notice of, convene or hold the Spirit special meeting in accordance with
the merger agreement, which, collectively, we refer to as a Spirit board breach termination;
or
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if
any regulatory authority grants a requisite regulatory approval but such requisite regulatory
approval contains, results or would reasonably be expected to result in, the imposition
of a burdensome condition.
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Termination Fee
(page 96)
Spirit
will pay Simmons a $22,750,000 termination fee if:
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(1)
either Spirit or Simmons effects an outside date termination or a no-vote termination,
or (2) Simmons effects a breach termination and, in each case, within 12 months of such
termination, Spirit consummates an acquisition transaction or enters into an acquisition
agreement with respect to an acquisition transaction, whether or not such acquisition
transaction is subsequently consummated (provided that, for purposes of the payment of
the termination fee, the “20%” references in the acquisition transaction
definition will be “50%”); or
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Simmons
effects a Spirit board breach termination.
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If Spirit
fails to pay any termination fee payable when due, then Spirit must pay to Simmons its costs and expenses (including attorneys’
fees) in connection with collecting such fee, together with interest on the amount of such fee at the prime rate of Citibank,
N.A. from the date such payment was due under the merger agreement until the date of payment.
Voting Agreements
(page 97)
In connection
with entering into the merger agreement, each member of the Spirit board of directors and Spirit’s named executive officers,
in their capacities as individuals, have separately entered into a Spirit voting agreement, pursuant to which they agreed to vote
their beneficially owned shares of Spirit common stock in favor of the merger proposal and certain related matters and against
alternative transactions. As of the Spirit record date, shares constituting approximately 24.7% of the Spirit common
stock entitled to vote at the Spirit special meeting are subject to Spirit voting agreements. For further information, please
see the section entitled “The Merger Agreement—Voting Agreements.”
Material U.S.
Federal Income Tax Consequences Relating to the Merger (page 98)
The respective
obligations of Simmons and Spirit to complete the merger are contingent upon Simmons and Spirit receiving a legal opinion from
Covington & Burling LLP, that the merger will qualify as a “reorganization” within the meaning of Section 368(a)
of the Code. Neither Simmons nor Spirit currently intends to waive this condition to the consummation of the merger. If any party
waives this condition after this registration statement is declared effective by the SEC, and if the tax consequences of the merger
to Spirit shareholders have materially changed, Simmons and Spirit will recirculate appropriate soliciting materials to resolicit
the votes of Spirit shareholders.
The merger
is intended to qualify as “reorganization” within the meaning of Section 368(a) of the Code. If the merger so qualifies,
a U.S. holder of Spirit common stock receiving Simmons common stock in exchange therefor will not recognize gain or loss upon
surrendering its Spirit common stock.
A U.S.
holder of Spirit common stock receiving cash in lieu of a fractional share of Simmons common stock generally will recognize gain
or loss equal to the difference between the amount of cash received instead of a fractional share and the basis in its shares
of Simmons common stock allocable to such fractional share. For further information, please see the section entitled “Material
U.S. Federal Income Tax Consequences Relating to the Merger.”
The
U.S. federal income tax consequences described above may not apply to all holders of Spirit common stock. Your tax consequences
will depend on your individual situation. Accordingly, we strongly urge you to consult your independent tax advisor for a full
understanding of the particular tax consequences of the merger to you.
Comparison of
Shareholders’ Rights (page 101)
Upon completion
of the merger, the rights of former Spirit shareholders will be governed by the Simmons charter and the Simmons bylaws. Simmons
is organized under Arkansas law, while Spirit is organized under Texas law. The rights associated with Spirit common stock are
different from the rights associated with Simmons common stock. Please see the section entitled “Comparison of Shareholders’
Rights” for a discussion of the different rights associated with Simmons common stock.
Risk Factors (page
25)
Before
voting at the Spirit special meeting, you should carefully consider all of the information contained in or incorporated by reference
into this proxy statement/prospectus, including the risk factors set forth in the section entitled “Risk Factors”
and described in Spirit’s and Simmons’ Annual Reports on Form 10-K for the fiscal year ended on December 31, 2020,
and other reports filed with the SEC, which are incorporated by reference into this proxy statement/prospectus. Please see the
section entitled “Where You Can Find More Information.”
MARKET
PRICE AND DIVIDENDS
Simmons common
stock is listed on Nasdaq under the symbol “SFNC” and Spirit common stock is listed on Nasdaq under the symbol “STXB.”
There were approximately 2,307 registered Simmons shareholders as of January 14, 2022, and approximately 296
registered Spirit shareholders as of January 14, 2022.
After
the merger, Simmons currently expects to pay (when, as and if declared by the Simmons board of directors) regular quarterly cash
dividends. While Simmons currently pays dividends on Simmons common stock of $0.18 per share, the
timing, declaration, amount and payment of any future cash dividends are at the discretion of the Simmons board of directors,
and there is no assurance that it will continue to pay dividends in the future. Future dividends on Simmons common stock
will depend upon its earnings and financial condition, liquidity and capital requirements, the general economic and regulatory
climate, its ability to service any equity or debt obligations senior to the common stock and other factors deemed relevant by
the Simmons board of directors. There are also regulatory requirements related to Simmons’ ability to pay dividends.
During
the third quarter of 2021, Spirit declared and paid a quarterly cash dividend of $0.12 per share. Spirit currently expects that
it will continue to pay comparable quarterly cash dividends for the foreseeable future or until the completion of the merger.
The merger agreement prohibits Spirit from declaring regular quarterly cash dividends at a rate in excess of $0.12 per share without
the prior written consent of Simmons. The timing, declaration, amount and payment of any
future cash dividends are at the discretion of the Spirit board of directors and will depend on many factors, including Spirit’s
results of operations, financial condition, capital requirements, investment opportunities, growth opportunities, any legal, regulatory,
contractual or other limitations on Spirit’s ability to pay dividends and other factors the Spirit board of directors may
deem relevant. In addition, there are regulatory restrictions on Spirit’s ability and the ability of Spirit Bank to pay
dividends.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements contained in or incorporated by reference into this proxy statement/prospectus may not be based on historical facts
and should be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements may be identified by reference to a future period(s) or by the use of forward-looking
terminology, such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,”
“estimate,” “expect,” “foresee,” “intend,” “indicate,” “target,”
“plan,” positions,” “prospects,” “project,” “predict,” or “potential,”
by future conditional verbs such as “could,” “may,” “might,” “should,” “will,”
or “would,” or by variations of such words or by similar expressions. These forward-looking statements include, without
limitation, statements relating to the impact Simmons and Spirit expect the merger to have on the combined entities’ operations,
financial condition and financial results, and Simmons’ and Spirit’s expectations about their ability to obtain regulatory
approvals and the Spirit shareholder approval, their ability to successfully integrate the combined businesses and the amount
of cost savings and other benefits Simmons and Spirit expect to realize as a result of the merger. The forward-looking statements
may also include, without limitation, those relating to Simmons’ and Spirit’s predictions or expectations of future
business or financial performance as well as goals and objectives for future operations, financial and business trends, business
prospects, and management’s outlook or expectations for future growth, revenue, expenses, assets, capital levels, liquidity levels,
asset quality, profitability, earnings, accretion, customer service, investment in digital channels, or other future financial
or business performance, strategies or expectations, the impacts of the COVID-19 pandemic and the ability of Simmons and Spirit
to manage the impacts of the COVID-19 pandemic, capital resources, market risk, plans for investments in securities, effect of
future litigation, acquisition strategy, legal and regulatory limitations and compliance and competition.
These
forward-looking statements involve risks and uncertainties, and may not be realized due to a variety of factors, including, without
limitation:
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changes
in Simmons’ and Spirit’s operating, acquisition, or expansion strategy;
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the
effects of future economic conditions (including unemployment levels and slowdowns in
economic growth), governmental monetary and fiscal policies, as well as legislative and
regulatory changes, including in response to the COVID-19 pandemic;
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changes
in interest rates;
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possible
adverse rulings, judgements, settlements, and other outcomes of pending or future litigation;
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the
ability to obtain regulatory approvals and meet other closing conditions to the merger;
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delay
in closing the merger;
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difficulties
and delays in integrating the Spirit business or fully realizing cost savings and other
benefits of the merger;
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changes
in the price of Simmons’ common stock before closing;
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the
outcome of any legal proceedings that may be instituted against Simmons or Spirit as
a result of the merger or otherwise;
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the
occurrence of any event, change or other circumstance that could give rise to the right
of one or both parties to terminate the merger agreement;
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business
disruption following the merger;
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the
reaction to the merger of the companies’ customers, employees and counterparties;
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uncertainty
as to the extent of the duration, scope, and impacts of the COVID-19 pandemic on Simmons,
Spirit and the merger;
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and
other relevant risk factors, which may be detailed from time to time in Simmons’
and Spirit’s press releases and filings with the SEC.
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Many of
these factors are beyond Simmons’ and Spirit’s ability to predict or control, and actual results could differ materially
from those in the forward-looking statements due to these factors and others. In addition, as a result of these and other factors,
Simmons’ and Spirit’s past financial performance should not be relied upon as an indication of future performance
either on a standalone or combined basis.
Simmons
and Spirit believe the assumptions and expectations that underlie or are reflected in any forward-looking statements, expressed
or implied, in this proxy statement/prospectus are reasonable, based on information available to Simmons and Spirit on the date
of this proxy statement/prospectus. However, given the described uncertainties and risks, Simmons and Spirit cannot guarantee
its future performance or results of operations or whether Simmons’ and Spirit’s future performance will differ materially
from the performance reflected in or implied by its forward-looking statements, and you should not place undue reliance on these
forward-looking statements. All forward-looking statements, expressed or implied, included in this proxy statement/prospectus
are expressly qualified in their entirety by the cautionary statements contained or referred to herein. Any forward-looking statement
speaks only as of the date of this proxy statement/prospectus, and neither Simmons nor Spirit undertakes any obligation to update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
RISK
FACTORS
In
addition to general investment risks and the other information contained in or incorporated by reference into this proxy statement/prospectus,
including the matters addressed under the section entitled “Cautionary Statement Regarding Forward-Looking Statements,”
and the matters discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” sections of Simmons’ Annual Report on Form 10-K for the year ended
December 31, 2020, Spirit’s Annual Report on Form 10-K for the year ended December 31, 2020, and any updates to those risk
factors set forth in Simmons’ and Spirit’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings
which have been filed with the SEC, Spirit shareholders should carefully consider the following factors in deciding whether to
vote for the proposals presented in this proxy statement/prospectus. Please also see the section entitled “Where You Can
Find More Information.”
Risks Relating
to the Merger
Because the market
price of Simmons common stock and the amount of fully diluted shares of Spirit common stock outstanding will both fluctuate, the
value of the per share merger consideration to be received by Spirit shareholders is uncertain.
Based
on the assumptions set forth herein, upon completion of the merger, each share of outstanding Spirit common stock (except for
shares of Spirit common stock held directly or indirectly by Spirit or Simmons and any dissenting shares) will be converted into
the right to receive the per share merger consideration, with cash paid in lieu of any resulting fractional shares. Any change
in the market price of Simmons common stock prior to the completion of the merger will affect the market value of the per share
merger consideration that Spirit shareholders will receive upon completion of the merger. The value of the per share merger consideration
could also change if the amount of fully diluted shares of Spirit common stock outstanding changes after the date hereof. At the
time of the Spirit special meeting you will not know or be able to calculate the value of the Simmons common stock that you will
receive upon completion of the merger. Stock price changes may result from a variety of factors, including general market and
economic conditions, changes in the respective businesses, operations and prospects of Simmons or Spirit, and regulatory considerations,
among other things. Many of these factors are beyond the control of Simmons and Spirit. You should obtain current market quotations
for shares of Simmons common stock and Spirit common stock before voting your shares at the Spirit special meeting.
There
will be no adjustment to the per share merger consideration based upon changes in the market price of Simmons common stock or
Spirit common stock prior to the time the merger is completed, and the merger agreement cannot be terminated due to a change in
the price of Simmons common stock.
Regulatory approvals
may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.
Before
the transactions contemplated by the merger agreement, including the merger and the bank merger, may be completed, various approvals
must be obtained from bank regulatory authorities. In determining whether to grant these approvals, the applicable regulatory
authorities consider a variety of factors, including the competitive impact of the proposal in the relevant geographic markets;
financial, managerial and other supervisory considerations, including the future prospects, of each party; potential effects of
the merger on the convenience and needs of the communities to be served and the record of the insured depository institution subsidiaries
under the Community Reinvestment Act of 1977 and the regulations promulgated thereunder, which we refer to as the Community Reinvestment
Act, including the subsidiaries’ overall compliance records and recent fair lending examinations; effectiveness of the parties
in combatting money laundering activities; the extent to which the proposal would result in greater or more concentrated risks
to the stability of the United States banking or financial system; and whether Simmons controls or would after consummation of
the merger control deposits in excess of certain limits. These regulatory authorities may impose conditions on the granting
of
such approvals. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying
completion of the merger or of imposing additional costs or limitations on the combined company following the merger. The regulatory
approvals may not be received at all, may not be received in a timely fashion, or may contain conditions on the completion of
the merger that are not anticipated or cannot be met. Furthermore, such conditions or changes may constitute a burdensome condition
that may allow Simmons to terminate the merger agreement and Simmons may exercise its right to terminate the merger agreement.
If the consummation of the merger is delayed, including by a delay in receipt of necessary regulatory approvals, the business,
financial condition and results of operations of each party may also be adversely affected. See the section entitled “The
Merger—Regulatory Approvals Required for the Merger.”
Failure of the
merger to be completed, the termination of the merger agreement or a significant delay in the consummation of the merger could
negatively impact Simmons and Spirit.
The merger
agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. See the section entitled
“The Merger Agreement—Conditions to Consummation of the Merger.” These conditions to the consummation of the
merger may not be fulfilled and, accordingly, the merger may not be completed. In addition, if the merger is not completed by
November 30, 2022, either Simmons or Spirit may choose to terminate the merger agreement at any time after such date if the failure
to consummate the transactions contemplated by the merger agreement is not caused by any breach of the merger agreement by the
party electing to terminate the merger agreement, before or after Spirit shareholder approval of the merger.
If the
merger is not consummated, the ongoing business, financial condition and results of operations of each party may be adversely
affected and the market price of Simmons common stock and Spirit common stock may decline significantly, particularly to the extent
that the current market price reflects a market assumption that the merger will be consummated. If the consummation of the merger
is delayed, including by the receipt of a competing acquisition proposal, the business, financial condition and results of operations
of each party may be adversely affected.
In addition,
each party has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions
contemplated by the merger agreement, as well as the costs and expenses of filing, printing and mailing this proxy statement/prospectus
and all filing and other fees paid to the SEC and other regulatory agencies in connection with the merger. If the merger is not
completed, the parties would have to recognize these expenses without realizing the expected benefits of the merger. Any of the
foregoing, or other risks arising in connection with the failure of or delay in consummating the merger, including the diversion
of management attention from pursuing other opportunities and the constraints in the merger agreement on the ability to make significant
changes to each party’s ongoing business during the pendency of the merger, could have an adverse effect on each party’s
business, financial condition and results of operations.
Additionally,
Simmons’ or Spirit’s business may have been adversely impacted by the failure to pursue other beneficial opportunities
due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger, and
the market price of Simmons’ or Spirit’s common stock might decline to the extent that the current market price reflects
a market assumption that the merger will be completed. If the merger agreement is terminated and a party’s board of directors
seeks another merger or business combination, such party’s shareholders cannot be certain that such party will be able to
find a party willing to engage in a transaction on more attractive terms than the merger.
Some of the conditions
to the merger may be waived by Simmons or Spirit without resoliciting Spirit shareholder approval of the merger agreement.
Some of
the conditions to the merger set forth in the merger agreement may be waived by Spirit or Simmons, subject to the agreement of
the other party in specific cases. See the section entitled “The Merger
Agreement—Conditions to Consummation of the
Merger.” If any such conditions are waived, Spirit and Simmons will evaluate whether an amendment of this proxy statement/prospectus
and resolicitation of proxies is warranted. In the event that the Spirit board of directors determines that resolicitation of
Spirit shareholders is not warranted, Simmons and Spirit will have the discretion to complete the merger without seeking further
Spirit shareholder approval.
Simmons and Spirit
will be subject to business uncertainties and contractual restrictions while the merger is pending.
Uncertainty
about the effect of the merger on employees, customers (including depositors and borrowers), suppliers and vendors may have an
adverse effect on the business, financial condition and results of operations of the parties to the merger. These uncertainties
may impair Simmons’ or Spirit’s ability to attract, retain and motivate key personnel and customers (including depositors
and borrowers) pending the consummation of the merger, as such personnel and customers may experience uncertainty about their
future roles and relationships following the consummation of the merger. Additionally, these uncertainties could cause customers
(including depositors and borrowers), suppliers, vendors and others who deal with Simmons and/or Spirit to seek to change existing
business relationships with Simmons and/or Spirit or fail to extend an existing relationship with Simmons and/or Spirit. In addition,
competitors may target each party’s existing customers by highlighting potential uncertainties and integration difficulties
that may result from the merger.
The pursuit
of the merger and the preparation for the integration may place a burden on each company’s management and internal resources.
Any significant diversion of management attention away from ongoing business concerns and any difficulties encountered in the
transition and integration process could have an adverse effect on each party’s business, financial condition and results
of operations.
In addition,
the merger agreement restricts each party from taking certain actions without the other party’s consent while the merger
is pending. These restrictions could have an adverse effect on each party’s business, financial condition and results of
operations. See the section entitled “The Merger Agreement—Covenants and Agreements—Conduct of Business Prior
to the Effective Time” for a description of the restrictive covenants applicable to Simmons and Spirit.
Spirit’s
directors and executive officers have interests in the merger that may be different from the interests of the Spirit shareholders.
Spirit’s
directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of
the Spirit shareholders generally. The Spirit board of directors was aware of these interests and considered them, among other
matters, in approving the merger agreement and the transactions contemplated by the merger agreement and recommending to Spirit
shareholders that they vote to approve the merger proposal. These interests are described in more detail under the section entitled
“The Merger—Interests of Spirit’s Directors and Executive Officers in the Merger.”
The merger agreement
contains provisions that may discourage other companies from pursuing, announcing or submitting a business combination proposal
to Spirit that might result in greater value to Spirit shareholders.
The merger
agreement contains provisions that may discourage a third party from pursuing, announcing or submitting a business combination
proposal to Spirit that might result in greater value to the Spirit shareholders than the merger. These provisions include a general
prohibition on Spirit from soliciting or entering into discussions with any third party regarding any acquisition proposal or
offers for competing transactions, as described under the section entitled “The Merger Agreement—Agreement Not to
Solicit Other Offers.” Furthermore, if the merger agreement is terminated, under certain circumstances, Spirit may be required
to
pay Simmons a termination fee equal to $22,750,000, as described under the section entitled “The Merger Agreement—Termination
Fee.” Spirit also has an unqualified obligation to submit its merger-related proposals to a vote by its shareholders, including
if Spirit receives an unsolicited proposal that the Spirit board of directors has determined in good faith is superior to the
merger. See the section entitled “The Merger Agreement—Spirit Special Meeting and Recommendation of the Spirit Board
of Directors.”
In connection
with entering into the merger agreement, each member of the Spirit board of directors and Spirit’s named executive officers,
in their capacities as individuals, have separately entered into a Spirit voting agreement pursuant to which they agreed to vote
their beneficially owned shares of Spirit common stock in favor of the merger proposal and certain related matters and against
alternative transactions. As of the Spirit record date, shares constituting approximately 24.7% of the Spirit common
stock entitled to vote at the Spirit special meeting are subject to Spirit voting agreements. For further information, please
see the section entitled “The Merger Agreement—Voting Agreements.”
The shares of
Simmons common stock to be received by holders of Spirit common stock as a result of the merger will have different rights from
the shares of Spirit common stock.
The rights
of Spirit shareholders are currently governed by the second amended and restated certificate of formation of Spirit, which we
refer to as the Spirit charter, and the second amended and restated bylaws of Spirit, as amended, which we refer to as the Spirit
bylaws. Upon completion of the merger, the rights of former holders of Spirit common stock will be governed by the Simmons charter
and the Simmons bylaws. Simmons is organized under Arkansas law, while Spirit is organized under Texas law. The rights associated
with Spirit common stock are different from the rights associated with Simmons common stock. See the section entitled “Comparison
of Shareholders’ Rights” for a discussion of the different rights associated with Simmons common stock.
The merger is
expected to, but may not, qualify as a reorganization under Section 368(a) of the Code.
The parties
expect the merger to be treated as a “reorganization” within the meaning of Section 368(a) of the Code, and the obligations
of Simmons and Spirit to complete the merger are conditioned upon the receipt of U.S. federal income tax opinion to that effect
from Covington & Burling LLP, which we refer to as Covington. This tax opinion represents the legal judgment of counsel rendering
the opinion and is not binding on the United States Internal Revenue Service, which we refer to as the IRS, or the courts. The
expectation that the merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code
reflects assumptions and takes into account the relevant information available to Simmons and Spirit at the time. However, this
information is not a fact and should not be relied upon as necessarily indicative of future results. Furthermore, such expectation
constitutes a forward-looking statement. For information on forward-looking statements, see the section entitled “Cautionary
Statement Regarding Forward-Looking Statements.”
If the
merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, then the exchange
of Spirit common stock for Simmons common stock pursuant to the merger may be treated as a taxable transaction to holders of Spirit
common stock. Consequently, a holder of Spirit common stock may be required to recognize gain or loss equal to the difference
between (1) the sum of the fair market value of Simmons common stock received by the Spirit shareholder in the merger and the
amount of cash, if any, received by the Spirit shareholder, and (2) the Spirit shareholder’s adjusted tax basis in the shares
of Spirit common stock exchanged therefor. For further information, please refer to the section entitled “Material U.S.
Federal Income Tax Consequences Relating to the Merger.” You should consult your tax advisor to determine the particular
tax consequences to you.
The opinion of
Stephens Inc. delivered to the Spirit board of directors prior to the signing of the merger agreement will not reflect changes
in circumstances after the date of the opinion.
The Spirit
board of directors received a fairness opinion from Stephens Inc., Spirit’s financial advisor, dated November 18, 2021,
which is attached as Annex C to this proxy statement/prospectus. For a description of the opinion, see “The Merger—Opinion
of Spirit’s Financial Advisor.” Such opinion has not been updated as of the date of this proxy statement/prospectus
and will not be updated at, or prior to, the time of the completion of the merger. Changes in the operations and prospects of
Simmons or Spirit, general market and economic conditions and other factors that may be beyond the control of Simmons and Spirit
may alter the value of Simmons or Spirit or the prices of shares of Simmons common stock or Spirit common stock by the time the
merger are completed. The opinion does not speak as of the time the merger is completed or as of any other date than the date
of the opinion. For a description of the other factors considered by the Spirit board of directors in determining to approve the
merger, see “The Merger—Spirit’s Reasons for the Merger and Recommendation of the Spirit Board of Directors.”
Litigation against
Spirit or Simmons, or the members of the Spirit or Simmons board of directors, could result in significant costs, management distraction,
and/or a delay of or injunction against the merger.
While
Simmons and Spirit believe that any claims that may be asserted by purported shareholder plaintiffs related to the merger would
be without merit, the results of any such potential legal proceedings are difficult to predict and could delay or prevent the
merger from being competed in a timely manner. The existence of litigation related to the merger could affect the likelihood of
obtaining the required approval from Spirit shareholders. Moreover, any litigation could be time consuming and expensive, could
divert Simmons and Spirit management’s attention away from their regular business and, any lawsuit adversely resolved against
Spirit, Simmons or members of the Spirit or Simmons board of directors, could have an adverse effect on each party’s business,
financial condition and results of operations.
If the
actions remain unresolved, they could prevent or delay the completion of the merger. One of the conditions to the consummation
of the merger is the absence of any law or order (whether temporary, preliminary or permanent) by any court or regulatory authority
of competent jurisdiction prohibiting, restricting or making illegal consummation of the consummation of the transactions contemplated
by the merger agreement (including the merger). Consequently, if a settlement or other resolution is not reached in any lawsuit
that is filed or any regulatory proceeding and a claimant secures injunctive or other relief or a regulatory authority issues
an order or other directive prohibiting, restricting or making illegal consummation of the consummation of the transactions contemplated
by the merger agreement (including the merger), then such injunctive or other relief may prevent the merger from becoming effective
in a timely manner or at all.
The COVID-19 pandemic
may delay and adversely affect the completion of the merger.
The COVID-19
pandemic has created economic and financial disruptions that have adversely affected, and are likely to continue to adversely
affect, the business, financial condition, liquidity, capital and results of operations of Simmons and Spirit. If the effects
of the COVID-19 pandemic cause continued or extended decline in the economic environment and the financial results of Simmons
or Spirit, or the business operations of Simmons or Spirit are disrupted as a result of the COVID-19 pandemic, efforts to complete
the merger and integrate the businesses of Simmons and Spirit may also be delayed and adversely affected. Additional time may
be required to obtain the requisite regulatory approvals, and regulatory authorities may impose additional requirements on Simmons
or Spirit that must be satisfied prior to completion of the merger, which could delay and adversely affect the completion of the
merger.
Risks Relating
to the Combined Company’s Business Following the Merger
The market price
of the common stock of the combined company after the merger may be affected by factors different from those currently affecting
the shares of Simmons or Spirit common stock.
Upon the
completion of the merger, Simmons shareholders and Spirit shareholders will become shareholders of the combined company. Simmons’
business differs from that of Spirit, and, accordingly, the results of operations of the combined company and the market price
of the combined company’s shares of common stock may be affected by factors different from those currently affecting the
independent results of operations of each of Simmons and Spirit. For a further discussion of the businesses of Simmons and Spirit,
please see the section entitled “Information About the Companies.” For a discussion of the businesses of Simmons and
Spirit and of certain factors to consider in connection with such businesses, please see the documents incorporated by reference
in this proxy statement/prospectus and referred to in the section entitled “Where You Can Find More Information.”
Sales of substantial
amounts of Simmons common stock in the open market by former Spirit shareholders could depress Simmons’ stock price.
Shares of Simmons
common stock that are issued to Spirit shareholders in the merger will be freely tradable without restrictions or further
registration under the Securities Act. Simmons currently expects to issue approximately 17,883,538 shares of Simmons common
stock in connection with the merger based on the assumptions described herein. If the merger is completed and if Spirit’s
former shareholders sell substantial amounts of Simmons common stock in the public market following completion of the merger, the
market price of Simmons common stock may decrease. These sales might also make it more difficult for Simmons to sell equity or
equity-related securities at a time and price that it otherwise would deem appropriate.
Combining the
two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the
merger may not be realized.
The success
of the merger will depend on, among other things, the combined company’s ability to combine the businesses of Simmons and
Spirit. If the combined company is not able to successfully achieve this objective, the anticipated benefits of the merger may
not be realized fully, or at all, or may take longer to realize than expected.
Simmons
and Spirit have operated and, until the completion of the merger, will continue to operate, independently. The success of the
merger, including anticipated benefits and cost savings, will depend, in part, on the successful combination of the businesses
of Simmons and Spirit. To realize these anticipated benefits and cost savings, after the completion of the merger, Simmons expects
to integrate Spirit’s business into its own. It is possible that the integration process could result in the loss of key
employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and
policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors
and employees or to achieve the anticipated benefits and cost savings of the merger. The loss of key employees could have an adverse
effect on the companies’ financial results and the value of their common stock. If Simmons experiences difficulties with
the integration process, the anticipated benefits of the merger may not be realized fully, or at all, or may take longer to realize
than expected. As with any merger of financial institutions, there also may be business disruptions that cause Simmons or Spirit
to lose current customers or cause current customers to remove their accounts from Simmons or Spirit and move their business to
competing financial institutions. Integration efforts between the two companies will also divert management attention and resources.
These integration matters could have an adverse effect on each of Simmons or Spirit during this transition period and for an undetermined
period after consummation of the merger.
The combined company
expects to incur substantial expenses related to the merger.
The combined
company expects to incur substantial expenses in connection with consummation of the merger and combining the business, operations,
networks, systems, technologies, policies and procedures of the two companies. Although Simmons and Spirit have assumed that a
certain level of transaction and combination expenses would be incurred, there are a number of factors beyond their control that
could affect the total amount or the timing of their combination expenses. Many of the expenses that will be incurred, by their
nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and combination expenses
associated with the merger could, particularly in the near term, exceed the savings that the combined company expects to achieve
from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the combination
of the businesses following the consummation of the merger. As a result of these expenses, both Simmons and Spirit expect to take
charges against their earnings before and after the completion of the merger. The charges taken in connection with the merger
are expected to be significant, although the aggregate amount and timing of such charges are uncertain at present.
Holders of Simmons
and Spirit common stock will have a reduced ownership and voting interest after the merger and will exercise less influence over
management.
Holders
of Simmons and Spirit common stock currently have the right to vote for the election of the directors and on other matters affecting
Simmons and Spirit, respectively. Upon the completion of the merger, each Spirit shareholder who receives shares of Simmons common
stock will become a shareholder of Simmons with a percentage ownership of Simmons common stock that is smaller than such shareholder’s
percentage ownership of Spirit common stock. Following completion of the merger, it is currently expected that former holders
of Spirit common stock as a group will own approximately 13.7% of the combined company’s common stock and existing
Simmons common shareholders as a group will own approximately 86.3% of the combined company’s common stock. As a
result, Spirit shareholders will have less influence on the management and policies of the combined company than they now have
on the management and policies of Spirit, and existing Simmons shareholders may have less influence than they now have on the
management and policies of Simmons.
Risks Relating
to an Investment in Simmons Common Stock
The market price
of Simmons common stock may decline as a result of the merger.
The market
price of Simmons common stock may decline as a result of the merger if Simmons does not achieve the perceived benefits of the
merger or the effect of the merger on Simmons’ financial results is not consistent with the expectations of financial or
industry analysts. In addition, upon completion of the merger, Simmons and Spirit shareholders will own interests in a combined
company operating an expanded business with a different mix of assets, risks and liabilities. Existing Simmons shareholders and
Spirit shareholders may not wish to continue to invest in the combined company, or for other reasons may wish to dispose of some
or all of their shares of the combined company.
Simmons’
management will have broad discretion as to the use of assets acquired from this merger, and Simmons may not use these assets
effectively.
Simmons’
management will have broad discretion in the application of the assets from this merger and could utilize the assets in ways that
do not improve Simmons’ results of operations or enhance the value of its common stock. Spirit shareholders will not have
the opportunity, as part of their investment decision, to assess whether these acquired assets are being used appropriately. Simmons’
failure to utilize these assets effectively could have an adverse effect on the combined company’s business, financial condition
and results of operations and cause the price of Simmons common stock to decline.
Simmons’
rights and the rights of Simmons shareholders to take action against Simmons’ directors and officers are limited.
The Simmons
charter eliminates Simmons’ directors’ liability to Simmons and its shareholders for money damages for breach of fiduciary
duties as a director to the fullest extent permitted by Arkansas law. Arkansas law provides that an officer has no liability in
that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in Simmons’
best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances.
The Simmons
charter, Simmons bylaws and indemnification agreements with Simmons’ directors and executive officers also require Simmons
to indemnify Simmons’ directors and executive officers for liability resulting from actions taken by them in those capacities
to the maximum extent permitted by Arkansas law. As a result, Simmons shareholders and Simmons may have more limited rights against
Simmons’ directors and officers than might otherwise exist under common law. In addition, Simmons may be obligated to fund
the defense costs incurred by Simmons’ directors and officers.
An investment
in Simmons common stock is not an insured deposit.
An investment
in Simmons common stock is not a bank deposit and is not insured or guaranteed by the FDIC, the Deposit Insurance Fund, or any
other government agency. Accordingly, you should be capable of affording the loss of any investment in Simmons common stock.
There may be future
sales of additional common stock or preferred stock of Simmons or other dilution of our equity, which may adversely affect the
value of Simmons common stock.
Simmons
is not restricted from issuing additional common stock or preferred stock, including any securities that are convertible into
or exchangeable for, or that represent the right to receive, common stock or preferred stock of Simmons or any substantially similar
securities. The value of Simmons common stock could decline as a result of sales by Simmons of a large number of shares of common
stock or preferred stock of Simmons or similar securities in the market or the perception that such sales could occur.
THE
SPIRIT SPECIAL MEETING
This section
contains information for Spirit shareholders about the Spirit special meeting. Spirit is mailing or otherwise delivering this proxy statement/prospectus
to you, as a Spirit shareholder, on or about January 21, 2022. This proxy statement/prospectus is also being delivered to Spirit
shareholders as Simmons’ prospectus for its offering of Simmons common stock in connection with the merger. This proxy statement/prospectus
is accompanied by a notice of the Spirit special meeting and a proxy that the Spirit board of directors is soliciting for use at the
Spirit special meeting and at any adjournments or postponements of the Spirit special meeting. References to “you” and “your”
in this section are to Spirit shareholders.
Date, Time and
Place of the Spirit Special Meeting
The Spirit special
meeting will be held on February 24, 2022 at 12:00 pm Central Time. On or about January 21, 2022 Spirit commenced mailing or otherwise
delivering this proxy statement/prospectus and the enclosed form of proxy to its shareholders entitled to vote at the Spirit special
meeting.
The Spirit
special meeting will be held in a virtual meeting format only. You will not be able to physically attend the Spirit special meeting.
You are
invited to attend and vote your shares via live webcast. In order to attend the Spirit special meeting, you must register at
www.proxydocs.com/STXB by 12:00 pm Central Time on February 23, 2022. You will be asked to provide the
control number located inside the shaded gray box on your proxy as described in the proxy. After completion of your registration,
further instructions, including a unique link to access the Spirit special meeting, will be emailed to you.
Purpose of
the Spirit Special Meeting
At the
Spirit special meeting, you will be asked to consider and vote on the following matters:
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the
advisory proposal on specified compensation;
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the
adjournment proposal, if necessary or appropriate; and
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any
other business that may properly come before the Spirit special meeting or any postponement
or adjournment of the Spirit special meeting.
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Recommendation
of the Spirit Board of Directors
The Spirit
board of directors unanimously approved the merger agreement, including the merger and all transactions contemplated thereby,
and recommends that Spirit shareholders vote “FOR” the merger proposal, “FOR” the advisory
proposal on specified compensation and, if necessary or appropriate, “FOR” the adjournment proposal. See the
section entitled “The Merger—Spirit’s Reasons for the Merger and Recommendation of the Spirit Board of Directors”
for a more detailed discussion of the factors considered by the Spirit board of directors in reaching its decision to approve
the merger agreement, including the merger and all transactions contemplated thereby. Please see the section entitled “The
Merger—Interests of Spirit’s Directors and Executive Officers in the Merger” for a more detailed discussion
of the compensation that will or may become payable to the Spirit named executive officers in connection with the merger.
Completion
of the merger is conditioned upon the approval of the merger proposal, but is not conditioned upon the approval of the advisory
proposal on specified compensation or, if necessary or appropriate, the adjournment proposal.
Record Date
and Quorum
Spirit
has set the close of business on January 14, 2022 as the Spirit record date to determine which Spirit shareholders will
be entitled to receive notice of and vote at the Spirit special meeting. Only Spirit shareholders at the close of business on
the Spirit record date will be entitled to vote at the Spirit special meeting. As of the Spirit record date, there were 17,288,547
shares of Spirit common stock outstanding and entitled to notice of, and to vote at, the Spirit special meeting, held by approximately
296 shareholders of record. Each holder of shares of Spirit common stock outstanding on the Spirit record date will
be entitled to one vote for each share held of record.
The presence
at the Spirit special meeting, in person or by proxy, of a majority of the shares of Spirit common stock outstanding and entitled
to vote as of the Spirit record date will constitute a quorum for the purposes of the Spirit special meeting. All shares of Spirit
common stock represented at the Spirit special meeting or represented by proxy, including abstentions, if any, will be treated
as present for purposes of determining the presence or absence of a quorum for all matters voted on at the Spirit special meeting.
If a quorum
is not present at the Spirit special meeting, it will be postponed until the holders of the number of shares of Spirit common
stock required to constitute a quorum are in attendance. If additional votes must be solicited in order for Spirit shareholders
to approve the merger proposal and the adjournment proposal is approved, the Spirit special meeting will be adjourned to solicit
additional proxies subject to the terms of the merger agreement. The Spirit special meeting may be adjourned by the affirmative
vote of holders of a majority of the shares of Spirit common stock represented in person or by proxy at the Spirit special meeting,
even if less than a quorum.
Vote Required;
Treatment of Abstentions and Failure to Vote
Approval
of the merger proposal requires the affirmative vote of holders of at least a majority of the outstanding shares of Spirit common
stock entitled to vote on the merger proposal. Approval of the advisory proposal on specified compensation requires the affirmative
vote of at least a majority of shares present or represented by proxy at the Spirit special meeting and entitled to vote on the
advisory proposal on specified compensation. Approval of the adjournment proposal requires the affirmative vote of at least a
majority of shares present or represented by proxy at the Spirit special meeting and entitled to vote on the adjournment proposal.
With respect
to the merger proposal, if you mark “ABSTAIN” on your proxy, fail to either submit a proxy or vote at the Spirit special
meeting, or are a “street name” holder and fail to instruct your bank, broker or other nominee how to vote, it will
have the same effect as a vote against the merger proposal. With respect to the advisory proposal on specified compensation and
the adjournment proposal, if you mark “ABSTAIN” on your proxy, it will have the same effect as a vote against such
proposals, and if you fail to either submit a proxy or vote at the Spirit special meeting, or are a “street name”
holder and fail to instruct your bank, broker or other nominee how to vote, it will have no effect on such proposals.
Shares Held
by Directors and Executive Officers
As of the Spirit
record date, there were 17,288,547 shares of Spirit common stock entitled to vote at the Spirit special meeting. As of
the Spirit record date, the directors and executive officers of Spirit and their affiliates beneficially owned and were entitled
to vote approximately 4,378,883 shares of Spirit common stock, representing approximately 25.3% of the shares
of Spirit common stock outstanding on that date. Spirit currently expects that the shares of Spirit common stock beneficially
owned by its directors and executive officers will
be voted in favor of the
merger proposal, the advisory proposal on specified compensation and, if necessary or appropriate, the adjournment proposal.
Each of the members of the Spirit board of directors and Spirit’s named executive officers, in their capacities as
individuals have separately entered into a Spirit voting agreement pursuant to which they agreed to vote their beneficially
owned shares of Spirit common stock in favor of the merger proposal and certain related matters and against alternative
transactions. For further information, please see the section entitled “The Merger Agreement—Voting
Agreements.”
Voting of Proxies;
Incomplete Proxies
Each copy
of this proxy statement/prospectus mailed to Spirit shareholders is accompanied by a form of proxy with instructions for voting.
If you hold your shares of Spirit common stock in your name as a shareholder of record as of the Spirit record date, you should
follow the instructions on the proxy card and vote your shares by one of the following methods:
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via the Internet
at www.proxypush.com/STXB;
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by telephone by calling
1-866-437-1228;
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by mail by completing,
signing, dating and returning the enclosed proxy in the enclosed envelope, which requires no additional postage if mailed
in the United States; or
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via live webcast
at the Spirit special meeting.
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If your
shares of Spirit common stock are held in “street name” through a bank, broker or other nominee, you must direct your
bank, broker or nominee how to vote in accordance with the instructions you received from your bank, broker or nominee. You may
not vote shares held in “street name” by returning a proxy directly to Spirit or in person at the Spirit special meeting
unless you provide a “legal proxy,” which you must obtain from your bank, broker or other nominee.
For shareholders
whose shares are registered in the name of a bank, broker or other nominee, please consult the voting instructions provided by
your bank, broker or other nominee for information about the deadline for voting by telephone or via the Internet.
When a
properly executed proxy is returned, the shares of Spirit common stock represented by it will be voted at the Spirit special meeting
in accordance with the instructions contained on the proxy. If any proxy is returned without indication as to how to vote, the
shares of Spirit common stock represented by the proxy will be voted in favor of each of the merger proposal, the advisory proposal
on specified compensation and, if necessary or appropriate, the adjournment proposal.
Your
vote is very important. To ensure your representation at the Spirit special meeting, please complete, sign, date and return the
enclosed proxy (or submit your proxy by telephone or through the internet). Whether or not you expect to attend the Spirit special
meeting, please vote promptly. Sending in your proxy now will not prevent you from voting your shares virtually at the Spirit
special meeting, since you may revoke your proxy at any time before it is voted.
Shares Held in
“Street Name”
If your
shares of Spirit common stock are held in “street name” through a bank, broker or other nominee, you must provide
the record holder of your shares with instructions on how to vote your shares. Banks, brokers and other nominees who hold shares
of Spirit common stock in “street name” for a beneficial owner of those shares typically have the authority to vote
in their discretion on “routine” proposals when they have not received
instructions from beneficial owners. However,
banks, brokers and other nominees are not allowed to exercise voting discretion with respect to the approval of matters determined
to be “non-routine,” without specific instructions from the beneficial owner. Spirit expects that all proposals to
be voted on at the Spirit special meeting will be “non-routine” matters. Broker non-votes are shares held by a bank,
broker or other nominee with respect to which such entity is not instructed by the beneficial owner of such shares to vote on
the particular proposal and the broker does not have discretionary voting power on such proposal. If your bank, broker or other
nominee holds your shares of Spirit common stock in “street name,” such entity will vote your shares of Spirit common
stock only if you provide instructions on how to vote by complying with the voter instruction form sent to you by your bank, broker
or other nominee with this proxy statement/prospectus.
Revocability of
Proxies and Changes to a Spirit Shareholder’s Vote
If you hold stock
in your name as a shareholder of record, you may change your vote or revoke any proxy at any time before the polls are closed
at the Spirit special meeting by (1) completing, signing, dating and returning a proxy with a later date than your original
proxy, (2) delivering a written revocation letter to Spirit’s corporate secretary, (3) submitting a vote by telephone or
by logging onto the Internet website specified on your proxy in the same manner you would to submit your proxy electronically
and following the instructions indicated on the proxy (in either case before the voting deadline), or (4) attending the Spirit
special meeting virtually, notifying Spirit’s corporate secretary that you are revoking your proxy and voting via live webcast
at the Spirit special meeting. If you choose to send a completed proxy bearing a later date than your original proxy, the new
proxy must be received before the polls are closed at the Spirit special meeting.
Any Spirit
shareholder entitled to vote at the Spirit special meeting may vote regardless of whether or not a proxy has been previously given,
but simply attending the Spirit special meeting (without notifying Spirit’s corporate secretary) will not constitute revocation
of a previously given proxy.
Written
notices of revocation and other communications about revoking your proxy should be addressed to:
Spirit
of Texas Bancshares, Inc.
1836 Spirit of Texas Way,
Conroe, Texas 77301
Attention: Corporate Secretary
If your
shares of Spirit common stock are held in “street name” through a bank, broker or other nominee, you should follow
the instructions of your bank, broker or other nominee regarding the revocation of voting instructions.
Solicitation of
Proxies
Spirit is soliciting
proxies from its shareholders in conjunction with the merger. Spirit will bear the entire cost of soliciting proxies from its shareholders.
In addition to solicitation of proxies by mail, Spirit will request that banks, brokers and other record holders send proxies and proxy
material to the beneficial owners of Spirit common stock and secure their voting instructions. Spirit will reimburse the record holders
for their reasonable expenses in taking those actions. If necessary, Spirit may use its directors, officers or employees, who will not
be specially compensated, to solicit proxies from Spirit shareholders, either personally or by telephone, facsimile, letter or electronic
means. Spirit has also made arrangements with Morrow Sodali LLC to assist it in soliciting proxies for the Spirit special meeting
and has agreed to pay approximately $15,000 plus out-of-pocket expenses and certain additional charges related to these services.
Attending the
Spirit Special Meeting
If you
are a Spirit shareholder as of the Spirit record date, you may vote your shares via live webcast at the Spirit special meeting.
Even if you currently plan to attend the Spirit special meeting, it is recommended that you also submit your proxy as described
above, so your vote will be counted if you later decide not to attend the Spirit special meeting. If you submit your vote by proxy
and later decide to vote at the Spirit special meeting, the vote you submit at the Spirit special meeting will override your proxy
vote.
We are
holding the Spirit special meeting in a virtual meeting format only. You will be provided the opportunity to participate in the
Spirit special meeting via live webcast. Shareholders will not be able to attend the Spirit special meeting in person. The process
for virtually attending the Spirit special meeting depends on how your shares are held.
Shareholder
of Record. If you are a “shareholder of record” on the record date for the Spirit special meeting, you will need
your control number located inside the shaded gray box on your proxy in order to ask questions and vote at the Spirit special
meeting via live webcast.
Street
Name Holders. If your shares of common stock are held in “street name,” to register to attend the Spirit special
meeting, you must submit a “legal proxy” from your broker, bank or other nominee. Please consult the voting form sent
to you by your bank, broker or other nominee to determine how to obtain a legal proxy in order to vote at the Spirit special
meeting. If you fail to submit a nominee-issued proxy to the Spirit special meeting, you will not be able to vote your
nominee-held shares via live webcast at the Spirit special meeting.
Delivery of Proxy
Materials
As permitted
by applicable law, only one copy of this proxy statement/prospectus is being delivered to Spirit shareholders residing at the
same address, unless such Spirit shareholders have notified Spirit of their desire to receive multiple copies of this proxy statement/prospectus.
Spirit will promptly deliver, upon oral or written request, a separate copy of this proxy statement/prospectus to any shareholder
residing at an address to which only one copy of such document was mailed.
If you
would like additional copies of this proxy statement/prospectus, please contact Jerry D. Golemon at (281) 516-4904 or Shareholder
Services at Computershare at (800) 962-4284.
Assistance
If you
need assistance in completing your proxy or have questions regarding the Spirit special meeting, please contact Jerry D. Golemon
at (281) 516-4904 or Shareholder Services at Computershare at (800) 962-4284.
THE
SPIRIT PROPOSALS
Proposal 1: Merger
Proposal
Spirit
is asking its shareholders to approve the merger agreement and the transactions contemplated thereby. For a detailed discussion
of the terms and conditions of the merger agreement, please see the section entitled “The Merger Agreement.” Spirit
shareholders should read this proxy statement/prospectus, including any documents incorporated in this proxy statement/prospectus
by reference, and its annexes, carefully and in their entirety for more detailed information concerning the merger agreement and
the merger. A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A.
As discussed
in the section entitled “The Merger—Spirit’s Reasons for the Merger and Recommendation of the Spirit Board of
Directors,” after careful consideration, its board of directors unanimously approved the merger agreement and determined
that the merger agreement and the transactions contemplated thereby are advisable and in the best interests of Spirit and the
Spirit shareholders.
Required
Vote
Approval
of the merger proposal requires the affirmative vote of holders of at least a majority of the outstanding shares of Spirit common
stock entitled to vote on the merger proposal. If you mark “ABSTAIN” for the merger proposal on your proxy, fail to
either submit a proxy or vote at the Spirit special meeting, or are a “street name” holder and fail to instruct your
bank, broker or other nominee how to vote, it will have the same effect as a vote against the merger proposal.
The
Spirit board of directors unanimously recommends that Spirit shareholders vote “FOR” the merger proposal.
Proposal 2: Advisory
Proposal on Specified Compensation
Spirit
is asking its shareholders to approve a non-binding advisory resolution approving the compensation
that will or may become payable to its named executive officers in connection with the merger. For a detailed discussion
on the compensation that will or may become payable to its named executive officers in connection with the merger, please see
the section entitled “The Merger—Merger-Related Compensation for Spirit’s Named Executive Officers.” As
required by Section 14A of the Exchange Act, Spirit is asking its shareholders to vote on the adoption of the following resolution:
“RESOLVED,
that the compensation that may be paid or become payable to the Spirit named executive officers in connection with the merger,
as disclosed in the table under the caption “The Merger—Merger-Related Compensation for Spirit’s Named Executive
Officers” in the proxy statement/prospectus in accordance with Item 402(t) of Regulation S-K, including
the associated narrative discussion, and the agreements or understandings pursuant to which such compensation may be paid or become
payable, is hereby APPROVED.”
The vote
on the non-binding advisory resolution approving the compensation that will or may become
payable to Spirit’s named executive officers in connection with the merger is a vote separate and apart from the
vote to approve the merger agreement. Accordingly, a Spirit shareholder may vote to approve the executive compensation and vote
not to approve the merger agreement and vice versa. Because the vote is advisory only, it will not be binding on either Spirit
or Simmons. Accordingly, because Simmons is contractually obligated to pay the compensation, the compensation will be payable,
subject only to the conditions applicable thereto, if the merger agreement is approved and regardless of the outcome of the advisory
vote.
Required
Vote
Approval
of the advisory proposal on specified compensation requires the affirmative vote of at least a majority of shares of Spirit common
stock present or represented by proxy at the Spirit special meeting and entitled to vote on the adjournment proposal. If you mark
“ABSTAIN” for the advisory proposal on specified compensation on your proxy, it will have the same effect as a vote
against such proposal, and if you fail to either submit a proxy or vote at the Spirit special meeting, or are a “street
name” holder and fail to instruct your bank, broker or other nominee how to vote, it will have no effect on such proposal.
The
Spirit board of directors unanimously recommends that Spirit shareholders vote “FOR” the advisory proposal on specified
compensation.
Proposal 3: Adjournment
Proposal
Spirit
is asking its shareholders to approve the adjournment of the Spirit special meeting to another date and place if necessary or
appropriate to solicit additional votes in favor of the merger proposal if there are insufficient votes at the time of such adjournment
to approve the merger proposal.
If, at
the Spirit special meeting, there is an insufficient number of shares of Spirit common stock present or represented by proxy and
voting in favor of the merger proposal, Spirit will, subject to the terms of the merger agreement, move to adjourn the Spirit
special meeting in order to enable the Spirit board of directors to solicit additional proxies for approval of the merger proposal.
If the Spirit shareholders approve the adjournment proposal, Spirit may adjourn the Spirit special meeting and use the additional
time to solicit additional proxies, including the solicitation of proxies from Spirit shareholders who have previously voted.
Notice need not be given of the adjourned meeting if the time and place of the adjourned meeting are announced at the Spirit special
meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the date and place of the adjourned meeting must be given to each shareholder of record entitled to vote
at the Spirit special meeting. Even if a quorum is not present, the Spirit special meeting may be adjourned by the affirmative
vote of the holders of a majority of the shares of Spirit common stock represented in person or by proxy at the Spirit special
meeting.
Required
Vote
Approval
of the adjournment proposal requires the affirmative vote of at least a majority of shares of Spirit common stock present or represented
by proxy at the Spirit special meeting and entitled to vote on the adjournment proposal. If you mark “ABSTAIN” for
the adjournment proposal on your proxy, it will have the same effect as a vote against such proposal, and if you fail to
either submit a proxy or vote at the Spirit special meeting, or are a “street name” holder and fail to instruct your
bank, broker or other nominee how to vote, it will have no effect on such proposal.
The
Spirit board of directors unanimously recommends that Spirit shareholders vote “FOR” the adjournment proposal, if
necessary or appropriate.
Other Matters
to Come Before the Spirit Special Meeting
As of
the date of this proxy statement/prospectus, the Spirit board of directors is not aware of any matters that will be presented
for consideration at the Spirit special meeting other than as described in this proxy statement/prospectus. If, however, the Spirit
board of directors properly brings any other matters before the Spirit special meeting, the persons named in the proxy will vote
the shares represented thereby in accordance with the recommendation of the Spirit board of directors on any such matter.
INFORMATION
ABOUT THE COMPANIES
Simmons First National
Corporation
501 Main Street
Pine Bluff, Arkansas 71601
Telephone: (870) 541-1000
Simmons
is a financial holding company registered under the BHC Act. Simmons is headquartered in Arkansas and as of September 30, 2021,
had, on a consolidated basis, total assets of $23.2 billion, total net loans of $10.6 billion, total deposits of $18.1 billion
and total shareholders’ equity of $3.0 billion. Simmons conducts its banking operations through its subsidiary bank, Simmons
Bank, in more than 200 financial centers as of September 30, 2021, located throughout market areas in Arkansas, Kansas, Missouri,
Oklahoma, Tennessee and Texas.
Simmons
seeks to build shareholder value by focusing on strong asset quality, maintaining strong capital, managing its liquidity position,
improving its operational efficiency and opportunistically growing its business, both organically and through acquisitions of
financial institutions.
Simmons’
business philosophy centers on building strong, deep customer relationships through excellent customer service and integrity in
its operations. While Simmons has grown in recent years into a regional financial institution and one of the largest bank/financial
holding companies headquartered in the State of Arkansas, Simmons continues to emphasize, where practicable, a community-based
mindset focused on local associates responding to local banking needs and making business decisions in the markets they serve.
Those efforts, though, are buttressed by experienced, centralized support functions in select, critical areas. While Simmons serves
a variety of customers and industries, Simmons is not dependent on any single customer or industry.
Simmons
common stock is traded on Nasdaq under the symbol “SFNC.”
Additional
information about Simmons may be found in the documents incorporated by reference into this proxy statement/prospectus. See the
section entitled “Where You Can Find More Information.”
Spirit of Texas Bancshares,
Inc.
1836 Spirit of Texas Way
Conroe, Texas 77301
Telephone: (936) 521-1836
Spirit
is a Texas corporation and a registered bank holding company located in the Houston metropolitan area with headquarters in Conroe,
Texas. Spirit offers a broad range of commercial and retail banking services through its wholly-owned bank subsidiary, Spirit
Bank.
Spirit
is a business-focused bank that delivers relationship-driven financial services to small and medium-sized businesses and individuals
in its market areas. Spirit’s philosophy is to target commercial customers whose businesses generate between $3 to $30 million
of annual revenue. Spirit’s product offerings consist of a wide range of commercial products, including term loans and operating
lines of credit to commercial and industrial companies; commercial real estate loans; construction and development loans; SBA
loans; commercial deposit accounts; and treasury management services. In addition, Spirit’s retail offerings include consumer
loans, 1-4 single family residential real estate loans and retail deposit products.
Spirit
operates in one reportable segment of business, community banking, which includes Spirit Bank. As of September 30, 2021, Spirit
had total assets of $3.15 billion, loans held for investment of $2.25 billion, total deposits of $2.67 billion and total
stockholders’ equity of $387.8 million.
Since
Spirit’s inception in 2008, it has implemented a growth strategy that includes organic loan and deposit generation through
the establishment of de novo branches, as well as strategic acquisitions that have either strengthened its presence
in existing markets or expanded its operations into new markets with attractive business prospects. Spirit has completed eleven
acquisitions in twelve years, four of which followed its initial public offering in May 2018.
Spirit
has 37 locations primarily in the Houston, Dallas/Fort Worth, Bryan/College Station,
San Antonio-New Braunfels, Corpus Christi, Tyler and Austin metropolitan areas, along with North Central Texas.
Spirit believes its exposure to these dynamic and complementary markets provides it with economic diversification and the opportunity
for expansion across Texas.
Spirit’s
top four markets include the Houston-The Woodlands-Sugar Land MSA, Dallas-Fort Worth-Arlington MSA, College Station-Bryan MSA
and San Antonio-New Braunfels MSA. As of June 30, 2021, Spirit’s deposit market share in each of these respective markets
was 0.23%, 0.07%, 3.90% and 0.30%. Overall, in the State of Texas, Spirit ranks 38th in total deposits as of June 30, 2021 according
to S&P Capital IQ Pro.
Spirit’s
common stock is traded on Nasdaq under the symbol “STXB.”
Additional
information about Spirit may be found in the documents incorporated by reference into this proxy statement/prospectus. See the
section entitled “Where You Can Find More Information.”
THE
MERGER
The
following discussion contains material information regarding the merger. The discussion is subject to, and qualified in its entirety
by reference to, the merger agreement, which is attached to this proxy statement/prospectus as Annex A and is incorporated
by reference herein. The following is not intended to provide factual information about the parties or any of their respective
subsidiaries or affiliates. This discussion does not purport to be complete and may not contain all of the information about the
merger that is important to you. We urge you to read carefully this entire proxy statement/prospectus, including the merger agreement,
for a more complete understanding of the merger.
Terms of the Merger
Each of
the Simmons board of directors and the Spirit board of directors approved the merger agreement. The merger agreement provides
that, among other things, (i) Spirit will merge with and into Simmons, with Simmons continuing as the surviving corporation in
the merger, and (ii) immediately following the merger, Spirit Bank will merge with and into Simmons Bank, with Simmons Bank continuing
as the surviving bank.
Based
on the assumptions set forth below, under the terms of the merger agreement, at the effective time, each share of Spirit common
stock that is issued and outstanding immediately prior to the effective time, excluding certain specified shares, will be converted
into the right to receive the per share merger consideration, subject to certain conditions and potential adjustments (including
substituting cash for Simmons common stock to the extent necessary to cash out Spirit’s stock options and warrants that
are outstanding immediately prior to the effective time). The per share merger consideration is based on the assumption that (i)
17,261,959 shares of Spirit common stock are issued and outstanding (excluding treasury shares), (ii) 435,676 shares
of Spirit common stock are reserved for issuance upon the vesting of Spirit RSUs, (iii) 780,230 shares of Spirit common
stock are subject to outstanding Spirit stock options with a weighted average exercise price of $14.65, and (iv) 15,312
shares of Spirit common stock are subject to outstanding Spirit warrants with a weighted average exercise price of $12.84,
in each case, immediately prior to the effective time. In addition, the exchange ratio assumes that the Simmons average closing
price is equal to $32.08, which was the closing sales price of Simmons common stock on January 7, 2022. Changes
in any of these assumptions will result in changes in the per share merger consideration. In the aggregate and based on the assumptions
set forth herein, Simmons will issue approximately 17,883,538 shares of Simmons common stock to the Spirit shareholders
upon completion of the merger, subject to certain conditions and potential adjustments under the merger agreement.
Simmons
will not issue any fractional shares of Simmons common stock in the merger. Instead, a Spirit shareholder who would otherwise
be entitled to receive a fraction of a share of Simmons common stock will receive, in lieu thereof, an amount in cash, rounded
up to the nearest whole cent (without interest), determined by multiplying (i) the fraction of a share (rounded to the nearest
thousandth when expressed as a decimal form) of Simmons common stock that such holder would otherwise be entitled to receive by
(ii) the Simmons average closing price.
Spirit
shareholders are being asked to approve the merger agreement, including the merger and all transactions contemplated therein.
See the section entitled “The Merger Agreement” for additional and more detailed information regarding the legal documents
that govern the merger, including information about the conditions to consummation of the merger and the provisions for terminating
or amending the merger agreement.
Background of
the Merger
The Spirit
board of directors, with the assistance of Spirit’s executive management, regularly evaluates Spirit’s strategies,
opportunities and objectives and considers ways to enhance Spirit’s short-, medium- and long- term performance and prospects,
all with the goal of increasing value for Spirit shareholders. The Spirit board
of directors’ strategic reviews and discussions
have focused on, among other things, the business and regulatory environment facing financial institutions generally and Spirit
in particular, as well as conditions and trends in the banking industry, including assessments of ongoing consolidation in the
financial services industry and the benefits and risks to Spirit and Spirit shareholders of potential strategic combinations compared
to the benefits and risks of continued operation as a stand-alone company. Factors assessed in connection with these reviews have
included the risks and opportunities associated with operating in existing and new markets, competition in existing and new markets,
potential synergies achievable from business combination transactions, increased regulatory burdens, the interest rate environment,
credit risk, market risk, including in connection with the COVID-19 pandemic, and the challenges of evolving technology and cyber-security
needs of Spirit.
In addition,
from time to time, the Spirit board of directors has considered various potential strategic alternatives, including acquisitions
or business combinations with other financial institutions, such as potential acquisitions of smaller bank holding companies operating
primarily in the markets in which Spirit operates or business combinations with larger banking institutions. In furtherance of
these considerations, in March 2018, the Spirit board of directors formed an executive committee of the Spirit board of directors,
which we refer to as the Spirit executive committee, to, among other things, oversee and monitor the merger and acquisition activities
of Spirit. The members of the Spirit executive committee include Spirit’s Chairman and Chief Executive Officer, Dean O.
Bass, Spirit’s President and Chief Lending Officer, David M. McGuire, and Directors of the Company and the Bank, Leo T.
Metcalf, III, Steven M. Morris, and Thomas C. Sooy.
During
2020, Spirit was contacted on an unsolicited basis by several financial institutions that expressed their potential interest in
exploring a potential business combination transaction. Messrs. Dean O. Bass and David McGuire held preliminary discussions with
certain of these financial institutions and informed the Spirit board of directors of such conversations. The Spirit board of
directors determined not to pursue discussions with these financial institutions because the institutions either ascribed low
valuations to Spirit or were viewed as being unable to finance a business combination that would be attractive to the Spirit shareholders.
However, in light of what was perceived by the Spirit board of directors as Spirit’s strong loan growth profile and Spirit’s
stable core deposits, the Spirit board of directors began to consider in late 2020 whether Spirit had an opportunity to engage
in a strategic business combination in order to enhance shareholder value. The Spirit board of directors also considered the potential
risks associated with exploring a potential business combination, including untimely disclosure of confidential information and
the consequences of an abandoned transaction to the Spirit shareholders, employees and customers. In connection with the evaluation
of these strategic alternatives, Mr. Bass, with the support of the Spirit board of directors had, from time to time, commencing
in late 2020, informal discussions with other financial institutions.
Heading
into 2021, the Spirit executive committee continued its regular monthly meetings at which its members discussed, among other things,
merger and acquisition activities, including, but not limited to, whole-bank acquisitions, branch purchases or divestitures and
other potential strategic alternatives, and the financial impact to Spirit of such activities. Spirit board members, Steven Gregory
Kidd, William K. Nix and Robert S. Beall, were invited guests at these Spirit executive committee meetings. In addition, beginning
in March 2021, Messrs. Bass and McGuire engaged in discussions with the representatives of Stephens, a nationally-recognized investment
banking firm, about the attributes of potential merger partners, including, but not limited to, the apparent financial ability
to pay, compatibility of business models, cultural synergies, overall impact to Spirit’s franchise, financial performance
in their respective markets, recent transactions, stock market performance, and apparent ability to complete a possible business
combination with Spirit. Following discussion with Mr. Bass, on March 8, 2021, Stephens compiled a list of eight potential merger
partners believed by Spirit, with Stephens’ input, to be interested in pursuing a potential strategic business combination
with Spirit on terms that would be attractive to Spirit and the Spirit shareholders.
During the second
and third quarter of 2021, Stephens, as part of its customary, periodic outreach to the eight identified financial institutions, included
in its meeting agenda with such financial institutions the possibility of a potential strategic combination with Spirit. Stephens kept
Messrs. Bass and McGuire apprised of such conversations, and Messrs. Bass and McGuire, in turn, kept the Spirit executive committee informed
about the conversations. Messrs. Bass and McGuire updated the Spirit executive committee at their regularly scheduled meetings held on
May 27, 2021, July 15, 2021 and August 19, 2021 regarding these discussions. The Spirit executive committee meeting on May 27, 2021
was held virtually via video and teleconference. The Spirit executive committee meetings on each of July 15, 2021 and August 19, 2021
were held in-person at Spirit’s offices in Conroe, Texas.
At a meeting held in-person
at Spirit’s offices in Conroe, Texas and by videoconference on June 17, 2021 and after discussion with Messrs. Bass and
McGuire and with input from the members of the Spirit executive committee regarding the discussions above, the Spirit board of directors
decided that it was in the best interests of Spirit and its shareholders for the Spirit executive committee to continue to review and
evaluate possible strategic business combination transactions and other strategic alternatives. Accordingly, on June 17, 2021 the Spirit
board of directors ratified the authority of the Spirit executive committee to monitor and oversee Spirit’s activities and the
activities of Spirit’s executive management, as delegated by the Spirit executive committee, related to any potential strategic
transaction.
Three
of the eight financial institutions contacted by representatives of Stephens during the second and third quarter of 2021 expressed
interest in a strategic business combination with Spirit and executed a customary non-disclosure agreement with Spirit, one of
which was Simmons, as discussed below. The non-disclosure agreements did not contain standstill provisions. Discussions with the
two parties other than Simmons did not advance beyond preliminary stages due to the view of the Spirit executive committee, based
on the preliminary discussions Stephens had with such parties, that the parties were unable to present a compelling offer or to
enhance Spirit’s shareholder value.
On June
1, 2021, a representative of Stephens as part of its ongoing dialogue with Simmons discussed Simmons’ potential interest
in pursuing a strategic business combination with Spirit at such time. George Makris, Jr., the Chairman and Chief Executive Officer
of Simmons, and Mr. Bass as well as certain other members of the parties’ executive management, have known one another for
over eight years and have periodically discussed with each other trends in the financial services industry, including recent consolidations
among financial institutions, and their respective institutions generally. In early 2020, as a result of such ongoing engagement
between Messrs. Makris and Bass, Spirit entered into a transaction with Simmons, involving Spirit’s purchase of Simmons’
Austin and San Antonio branches.
On July
12, 2021, Mr. Bass contacted Simmons to continue the discussion started by the Stephens representative. That same day, Simmons
executed the customary non-disclosure agreement with Spirit noted above. Following the execution of the non-disclosure agreement,
certain executives of Simmons provided Spirit with an overview of Simmons’ business and operations, as well as its strategic
plan and recent acquisitions. Over the next several weeks, Messrs. Bass and McGuire from Spirit and certain executives from Simmons,
along with representatives from Stephens, continued to engage in preliminary discussions and exchange information related to their
respective enterprises.
Representatives
of Stephens attended via teleconference the August 19, 2021 meeting of the Spirit executive committee to discuss, among other
things, the current market and peer comparisons.
At a meeting of the
Spirit executive committee on September 16, 2021 held in-person at Spirit’s offices in Conroe, Texas and via videoconference,
the Spirit executive committee discussed the preliminary conversations and information shared between members of the Spirit and Simmons
management teams. Representatives from Stephens attended the meeting and presented the Spirit executive committee with a pro forma model of
a potential
transaction with Simmons using various stock prices for both parties and highlighting the financial metrics and capital levels of
the resulting institution. Representatives of Stephens responded to questions from the Spirit executive committee. After discussion
and review of the materials provided by Stephens and the information shared by Spirit executive management, the Spirit executive committee
determined to move forward in pursuing a potential transaction with Simmons.
On September
21, 2021, a meeting between Messrs. Bass and McGuire from Spirit and Mr. Makris, Jr., Robert Fehlman (President and Chief Operating
Officer), Steve Massanelli (Senior Executive Vice President and Chief Administrative Officer), Jay Brogdon (Executive Vice President
and Chief Financial Officer), George Makris III (Executive Vice President, General Counsel, and Secretary), Matt Reddin (Executive
Vice President and Chief Banking Officer), Jena Compton (Executive Vice President and Chief People and Corporate Strategy Officer),
John Barber (Executive Vice President and Chief Credit Officer), Jennifer Gisi (Senior Vice President, Assistant General Counsel,
and Assistant Secretary), and Marty Casteel (Director) of Simmons occurred. Representatives of Stephens were present for such
meeting. During the meeting, the parties discussed Spirit’s business and operations, the market outlook and other matters.
Following that meeting, Simmons’ management informed Stephens that they were interested in continuing discussions with Spirit
regarding its organization and future.
On September 27, 2021
upon the recommendation of the Spirit executive committee, the Spirit board of directors determined that it was in the best interests
of Spirit and its shareholders to continue exploring and evaluating potential strategic alternatives, including the conversations to
date with Simmons. In connection with such determination, the Spirit board of directors formed a strategic planning committee of the
Spirit board of directors consisting of Dean O. Bass (Chair), David M. McGuire, Leo T. Metcalf, III, Steven M. Morris, Thomas C. Sooy,
Steven Gregory Kidd, William K. Nix and Robert S. Beall, which we refer to as the Spirit strategic committee, to be advised by Spirit’s
executive management, Spirit professional advisors, including Hunton Andrews Kurth LLP, as legal counsel, which we refer to as Hunton,
and Stephens, as financial advisor. The Spirit strategic committee was formed in exercise of the Spirit board of directors’ fiduciary
duty and for convenience and charged with the responsibility to review, evaluate, investigate, formulate, negotiate, document and
recommend to the Spirit board of directors the terms of any potential strategic alternative, to communicate, discuss and negotiate with
third parties and their respective representatives concerning potential strategic alternatives, and to recommend to the Spirit board
of directors a plan of action with respect to the strategic alternatives then available to Spirit.
On September
27, 2021, Simmons submitted a non-binding letter of intent, which we refer to as the LOI, to Spirit. The LOI provided that Simmons
would pay the Spirit shareholders aggregate consideration consisting of 18,285,000 shares of Simmons common stock, subject to
certain adjustments for the cash-out of certain stock options and warrants. The LOI included the potential
appointment of Dean O. Bass to the Simmons board of directors, an exclusivity period during which Simmons and Spirit would conduct
due diligence on each other, and other customary provisions. Over the course of the following two days, both parties conferred
with their respective legal counsel and financial advisors and exchanged further information related to Spirit’s historical
and projected financial performance, Simmons’ rationale for a strategic transaction with Spirit and other limited due diligence
matters. As part of these conversations, Stephens presented the LOI to the Spirit strategic committee on September 28, 2021. During
the virtual meeting of the Spirit strategic committee at which representatives of Spirit’s executive management and Stephens
were present, Spirit’s executive management presented Simmons’ rationale for a strategic transaction with Spirit.
Based on information provided by representatives of Stephens and Spirit’s executive management, the Spirit strategic committee
also considered, among other things: the results of Stephens’ outreach efforts to the eight financial institutions contacted
during the second and third quarter of 2021; the potential benefits of a strategic transaction with Simmons compared to Spirit’s
prospects as a standalone business; the attributes and characteristics of Simmons, including but not limited to, the premium to
the Spirit shareholders, Simmons’ increased financial resources, its history of paying dividends, its reputation, its history
of successful acquisitions and certain other potential synergies; and the expanded products and services that would enhance Spirit’s
customer relationships. In light of these and other factors, the Spirit
strategic committee determined that a potential transaction
with Simmons provided greater shareholder value than remaining independent. Following discussion, the Spirit strategic committee
instructed Stephens to continue negotiations with Simmons to seek an improved purchase price and a shorter exclusivity period.
In addition, the Spirit strategic committee authorized Mr. Bass to execute a revised LOI. After the meeting and at the instruction
of the Spirit strategic committee, Stephens returned a revised draft of the LOI to Simmons on September 28, 2021, which we refer
to as the revised LOI. The revised LOI provided for certain downside protections and also provided that (i) any voting agreements
would be subject to customary termination provisions in connection with the exercise of fiduciary duties by the Spirit board of
directors, (ii) Dean O. Bass would also be appointed to the Simmons Bank board of directors, and (iii) the revised LOI would be
governed by the laws of the State of Texas and specified Dallas County, Texas as the venue for any action or claim arising out
of related to the revised LOI.
On September
29, 2021, following discussions between the financial advisors of Simmons and Spirit, Simmons returned a second revised LOI to
Spirit which increased the number of shares of Simmons common stock to be paid to Spirit shareholders to 18,325,000, representing
an increase of 40,000 shares, shortened the exclusivity period to 51 days and accepted the proposed venue change; however, the other
proposed changes in the revised LOI were not accepted. The parties executed the LOI on September 29, 2021.
Simmons
and Spirit then commenced their respective due diligence reviews of each other, which included, among other things, an evaluation
of the other party’s operations, material contracts and loan portfolio, and each party held discussions with selected members
of the senior management of the other party. Both Simmons and Spirit established virtual data rooms that were populated with
information on the parties based on requests by each side. On October 18, 2021, members of the Simmons executive management team
traveled to Conroe, Texas to meet with the Spirit executive management team. On November 4, 2021, members of the Simmons and Spirit
executive management teams held a telephonic due diligence meeting also attended by representatives of the parties’ financial
advisors. On November 15, 2021, Spirit’s executive management team traveled to Little Rock, Arkansas to meet with the Simmons
executive management team and to complete the parties’ due diligence.
Simmons
provided an initial draft of the merger agreement to Spirit on October 27, 2021. Between October 27, 2021 and November 17, 2021,
Simmons and Spirit, together with their legal and financial advisors, discussed and negotiated the various legal and business
terms of the merger agreement, its ancillary agreements (including voting agreements) and the contemplated transaction. The negotiations
of the merger agreement primarily concentrated on Spirit’s ability to operate its business between the signing of the merger
agreement and closing, the termination events, including those that trigger the payment of a termination fee, the amount of the
termination fee, no-solicitation covenants, the governing law and venue for any transaction litigation, and closing conditions
related to the accuracy of the parties’ representations and warranties on the closing date. In addition, Simmons and Spirit
discussed and negotiated voting agreements from the Spirit directors and named executive officers.
On November
4, 2021, the Spirit strategic committee held a virtual meeting at which representatives of management, Hunton and Stephens were
present. At that meeting, representatives of Hunton reviewed with the Spirit strategic committee its fiduciary duties in the context
of the potential transaction and the material terms of the draft merger agreement. The Spirit strategic committee discussed with
its advisors the material terms of the draft merger agreement, including, but not limited to, the mutuality of certain representations
and warranties, the governing law and venue for any transaction litigation, the parties’ closing conditions and certainty
of closing, the covenants governing Spirit’s ability to operate in the ordinary course of business between signing and closing,
the amount of the proposed termination fee payable by Spirit and the circumstances in which such termination fee would be payable,
no-solicitation covenants, and certain other covenants of Spirit. Also at the meeting, the Spirit strategic committee discussed
the terms of the voting agreement with Simmons pursuant to which Spirit’s directors and named executive officers would agree
to vote their shares of Spirit common stock in favor of the merger. Also at the meeting, a representative of Stephens reviewed
the financial aspects of the merger and the strategic and financial rationale of the merger and responded to questions by the
Spirit strategic committee. Following discussion, the Spirit strategic committee instructed Hunton to try to seek more favorable
terms in the
merger agreement, including seeking a lower termination fee, limiting the circumstances in which the termination
fee would be payable to Simmons, changes to the closing conditions to increase the certainty of closing and certain other changes
that would improve deal certainty.
Following
the meeting, Simmons’ and Spirit’s respective legal advisors continued to negotiate the terms of the merger agreement.
On November
16, 2021, the Spirit strategic committee held another virtual meeting at which representatives of management, Hunton and Stephens
were present. At that meeting, representatives of Hunton reviewed the material revisions to the merger agreement and related transaction
documents since the November 4, 2021 committee meeting, as well as the material business and legal points that remained unresolved.
Among other things, Hunton’s representatives reviewed the no-solicitation covenants, the termination fee amount, the circumstances
in which the termination fee would become payable and closing conditions related to the accuracy of the parties’ representations
and warranties on the closing date. Hunton’s representatives also reviewed the fiduciary duties of the Spirit strategic
committee members in connection with the merger. Also at the meeting, a representative of Stephens provided an updated financial
analysis of the merger and reviewed the strategic and financial rationale in favor of the merger. Representatives of Stephens
and Hunton responded to questions by the Spirit strategic committee members. During this meeting, members of the Spirit strategic
committee discussed at length with its advisors various topics, including, but not limited to: overall market volatility, particularly
with respect to bank and bank holding company stocks, and the risk that such volatility might impact overall transaction value;
potential synergies arising from the merger; cultural fit of Simmons and Spirit; transaction execution risk, closing conditions
and termination rights and remedies, and termination fee triggers. Following discussion, the Spirit strategic committee instructed
Hunton to continue negotiating for improved terms to the draft merger agreement. Following the meeting, negotiations continued
between the respective parties’ legal counsel related to the no-solicitation covenant, the termination fee amount and the
circumstances in which the termination fee would become payable.
On November
18, 2021, the Spirit strategic committee met in Conroe, Texas. Representatives of Spirit’s executive management, Stephens
and Hunton were also present. At that meeting, the Spirit strategic committee reviewed and discussed the proposed final forms
of the merger agreement and related transaction documents. At that meeting, representatives of Hunton reviewed the changes in
the material terms of the merger agreement and related transaction documents since the November 16, 2021 committee meeting. Also
at the meeting, a representative of Stephens reviewed the financial aspects of the merger and summarized the strategic and financial
rationale in favor of the transaction and responded to questions by the Spirit executive committee members. Finally, members of
Spirit’s senior management reviewed with the Spirit strategic committee their diligence findings. After further discussion,
the Spirit strategic committee concluded that the terms of the proposed merger with Simmons were in the best interests of Spirit
and its shareholders and recommended that the Spirit board of directors approve the merger agreement and the transactions contemplated
thereby and recommend the merger agreement to the Spirit shareholders for approval.
On November 18,
2021, the Spirit board of directors held a meeting in Conroe, Texas and via videoconference at which representatives of
Spirit’s executive management, Stephens and Hunton were present. At the request of the Spirit board of directors, Stephens
reviewed with the Spirit board of directors its financial analysis of the merger consideration (as described in the
section entitled “The Merger—Opinion of Spirit’s Financial Advisor”) and responded to questions by the
Spirit board of directors. At the request of the Spirit board of directors, Stephens then delivered its oral opinion, which was
confirmed in writing and dated November 18, 2021, to the effect that, as of such date and subject to the procedures followed,
assumptions made, matters considered and qualifications and limitations on the review undertaken by Stephens as set forth in its
opinion, the merger consideration (as described in the section entitled “The Merger—Opinion of Spirit’s
Financial Advisor”) was fair, from a financial point of view, to the Spirit shareholders. Also at this meeting, Hunton
reviewed with the Spirit board of directors their fiduciary duties in the context of the proposed transaction and the final terms of the proposed merger agreement.
Hunton responded to questions from members of the Spirit board of directors. After further discussion
among the directors and Spirit’s advisors and taking into account,
among other things, the factors described in the section entitled “—Spirit’s Reasons for the Merger,” the Spirit
board of directors unanimously approved the merger agreement and the transactions contemplated thereby.
On November
18, 2021, the Simmons board of directors held a meeting to consider the terms of the merger and merger agreement. At the meeting,
members of Simmons’ management reported on the status of due diligence and negotiations with Spirit. Also at the meeting,
Simmons’ financial advisor reviewed with the Simmons board of directors the financial aspects of the merger. At the meeting,
Simmons’ internal legal counsel reviewed with the Simmons board of directors its fiduciary duties and reviewed the key terms
of the merger agreement and related agreements (including the voting agreements), as described elsewhere in this proxy statement/prospectus,
including a summary of the provisions relating to governance of the combined company and the provisions relating to employee matters.
After
considering the proposed terms of the merger agreement, the terms of the voting agreements, and taking into consideration the
matters discussed during that meeting and prior meetings of the Simmons board of directors, including the factors described in
the section entitled “—Simmons’ Reasons for the Merger,” the Simmons board of directors determined that
the merger was consistent with Simmons’ business strategies and in the best interests of Simmons and Simmons shareholders
and the Simmons board of directors voted to adopt the merger agreement, the merger and the other transactions contemplated by
the merger agreement.
Following
the board meetings of Simmons and Spirit, on November 18, 2021, Simmons and Spirit executed the merger agreement and the directors
and named executive officers of Spirit executed the voting agreements. On November 19, 2021, Simmons and Spirit issued a joint
press release announcing the execution of the merger agreement.
Spirit’s
Reasons for the Merger and Recommendation of the Spirit Board of Directors
After
careful consideration, at a meeting held on November 18, 2021, the Spirit board of directors determined that the merger agreement,
including the merger and the other transactions contemplated thereby, is in the best interests of Spirit and its shareholders
and unanimously approved the merger agreement and the transactions contemplated thereby.
In reaching
its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the
Spirit board of directors and the strategic planning committee of the Spirit board of directors, which we refer to as the special
committee, considered a number of factors, both positive and negative, and potential benefits and detriments of the merger to
Spirit and the Spirit shareholders in consultation with Spirit’s management, as well as Spirit’s financial and legal
advisors. The special committee and the Spirit board of directors identified the following factors and benefits of the merger
that, among others, the special committee and the Spirit board of directors believes generally support its determination and recommendation,
which are not presented in order of priority:
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·
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the
business capabilities, earnings and growth prospects, current and projected financial
and regulatory condition, assets, results of operations, business strategy and current
and prospective regulatory environment of both Spirit and Simmons;
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·
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other
strategic alternatives for Spirit, including continuing to operate as a standalone company
and the potential to acquire, be acquired or combine with other third parties, and the
risks and uncertainties associated with each alternative, as well as the Spirit board
of directors’ assessment that none of these alternatives was reasonably likely
to present superior opportunities for Spirit to create greater value for the Spirit shareholders,
taking into account the timing and the likelihood of accomplishing such alternatives
and the risks of execution, as well as business, competitive, industry and market risks;
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·
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the
financial information and analyses presented by Stephens to the Spirit board of directors,
and the opinion of Stephens, dated November 18, 2021, to the Spirit board of directors as
to the fairness of the merger consideration (as described in the section entitled
“The Merger—Opinion of Spirit’s Financial Advisor”) to the Spirit shareholders,
from a financial point of view and as of the date of the opinion and based on and subject
to the assumptions, procedures, factors, qualifications and limitations set forth therein;
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·
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that
the per share merger consideration represents a premium of 28% per share, based on the
closing prices of Spirit common stock and Simmons common stock on November 17, 2021,
the day before the execution of the merger agreement;
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·
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expectation
that the merger will be generally tax-free for United States federal income tax purposes
for Spirit shareholders;
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·
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the
results of Spirit’s due diligence investigation of Simmons, including the Spirit
board of directors’ opinion of the reputation, competence, business practices,
integrity and experience of Simmons and its management;
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·
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the
belief that the merger will result in a combined company with greater financial resources
and a higher lending limit than the Spirit would have if it were to continue its operations
as an independent entity;
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·
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the
anticipated cost savings from expected increases in operating efficiency, reduced payments
to vendors and third parties and elimination of duplicate executive management positions,
while increasing responsiveness to compliance and regulatory requirements;
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·
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the
limited geographic overlap between Spirit and Simmons, which will expand and diversify
the markets in which the combined company operates and is expected to result in a high
rate of retention of Spirit’s employees after the announcement of the merger, which
retention is expected to benefit the combined company;
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·
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the
belief that Spirit will be able to pair its strong commercial deposit franchise and loan
portfolio with Simmons’s sizeable loan portfolio thereby enhancing the combined
net interest margin and adding Simmons’s track record of an ability to grow loans
faster than the Spirit could do on an independent basis;
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·
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the
view of Spirit’s management that Simmons’ greater resources provides the
combined company greater resiliency;
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·
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the
belief that Simmons’ breadth and depth of management will offer Spirit greater
expertise, an ability to offset staffing deficiencies and succession issues and greater
bench strength;
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the
belief that Simmons’ extensive trust and wealth management platform and suite of
consumer banking products and services, including a variety of trust, investment, agency
and custodial services, will offer Spirit’s customers more expansive products and
services while providing more scale to Spirit’s operations and profitability;
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·
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the
view of Spirit’s management that the merger will allow for greater opportunities
for the Spirit’s clients, customers and other constituencies within the communities
in which Spirit operates, and that the potential synergies, low loan and deposit concentration
levels allowing greater growth in all classes of commercial lending and diversification
resulting from the merger will enhance product offerings and customer service beyond
the level believed to be reasonably achievable by the Spirit on an independent basis;
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·
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the
recommendation of Spirit’s management in favor of the merger, considered in light
of the benefits to be received by them in connection with the merger;
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that
the terms and conditions of the merger agreement, including, but not limited to, the
representations, warranties and covenants of the parties, the conditions to closing and
the form and structure of the aggregate merger consideration, are reasonable;
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·
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the
likelihood that the merger will be completed based on, among other things, (i) each party’s
obligation to use its reasonable best efforts to obtain regulatory approvals as promptly
as practicable and (ii) the limited closing conditions contained in the merger agreement;
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that
the merger agreement provides Spirit with the ability to seek specific performance by
Simmons of its obligations under the merger agreement, including to consummate the merger;
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·
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that
the aggregate merger consideration to be issued in the merger is a fixed number of shares
of Simmons common stock, which could allow the Spirit shareholders to benefit from an
increase in the trading price of Simmons common stock during the pendency of the merger;
and
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·
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the
ability of the Spirit board of directors to withhold its recommendation that Spirit shareholders
vote to approve the merger agreement in the event of a superior proposal, subject to
the terms and conditions set forth in the merger agreement (including the right of Simmons
to match any competing bid and the obligation of Spirit to nonetheless submit the merger
agreement to the Spirit shareholders).
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The special
committee and the Spirit board of directors also identified and considered a variety of uncertainties and risks concerning the
merger, including, but not limited to, the following:
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·
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the
possibility that the merger may not be completed, or that its completion may be unduly
delayed, for reasons beyond the control of Spirit or Simmons;
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·
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the
regulatory approvals required to complete the merger, the potential length of the regulatory
approval process and the risks that the regulators could impose materially burdensome
conditions that would allow Simmons to terminate the merger agreement or refuse to consummate
the merger;
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·
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the
time, attention and effort required from Spirit’s management and employees, and
for Spirit employee attrition, during the period prior to the completion of the merger
and the potential effect on Spirit’s and Simmons’ respective business and
relationships with customers, service providers and other stakeholders, whether or not
the merger is completed;
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·
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the
requirement that Spirit conduct its business in the ordinary course and the other restrictions
on the conduct of the Spirit’s business prior to completion of the merger, which
may delay or prevent Spirit from undertaking business opportunities that may arise pending
completion of the merger;
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·
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the
potential that certain provisions of the merger agreement prohibiting Spirit from soliciting,
and limiting its ability to respond to, proposals for alternative transactions, and requiring
the payment of a termination fee if the merger agreement is terminated under certain
circumstances could have the effect of discouraging an alternative proposal;
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·
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certain
conditions to closing, including the acceptance by Spirit warrant holders of a warrant
cancellation agreement and the satisfaction of certain asset quality and capital ratios;
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·
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the
fact that the interests of certain of Spirit’s directors and executive officers
may be different from, or in addition to, the interests of Spirit’s other shareholders;
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·
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the
transaction costs and expenses that will be incurred in connection with the merger, including
the costs of integrating the businesses of Spirit and Simmons;
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the
possible effects of the pendency or consummation of the transactions contemplated by
the merger agreement, including any suit, action or proceeding initiated in respect of
the merger;
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that
the aggregate merger consideration to be issued in the merger is a fixed number of shares
of Simmons common stock, which may adversely impact the Spirit shareholders if the trading
price of Simmons common stock decreases during the pendency of the merger; moreover,
the exchange ratio will decrease in the event that the number of outstanding shares of
Spirit common stock increases between the time of signing and closing;
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the
risk that benefits and synergies currently expected to result from the merger may not
be realized or may not be realized within the expected time period, and the risks associated
with the integration of Spirit and Simmons; and
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the
limited geographic overlap between Spirit and Simmons, which may limit the combined company’s
ability to implement cost savings by eliminating branch locations and duplicate management
and other employee positions.
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The foregoing
discussion of information and factors considered by the special committee and the Spirit board of directors is not intended to
be exhaustive. In light of the variety of factors considered in connection with its evaluation of the merger agreement and the
transactions contemplated thereby, the special committee and the Spirit board of directors did not find it practicable to, and
did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations.
Moreover, each member of the special committee and the Spirit board of directors applied his or her own personal business judgment
to the process and may have given different weight to different factors than other members gave to such factors.
The Spirit
board of directors collectively made its determinations and recommendations based on the conclusion reached by its members, in
light of the factors that each of them considered appropriate, that the merger is in the best interests of Spirit and the Spirit
shareholders.
It should
be noted that this explanation of the Spirit board of directors’ reasoning and all other information presented in this section
is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary
Statement Regarding Forward-Looking Statements.”
For
the reasons set forth above, the Spirit board of directors unanimously approved the merger agreement, the merger and the other
transactions contemplated by the merger agreement, determining that they are advisable and fair to, and in the best interest of,
Spirit and the Spirit shareholders and recommends that Spirit shareholders vote “FOR” the merger proposal, “FOR”
the advisory proposal on specified compensation and, if necessary or appropriate, “FOR” the adjournment proposal.
Each of
the members of the Spirit board of directors and Spirit’s named executive officers, in their capacities as individuals,
entered into the Spirit voting agreements with Simmons and Spirit pursuant to which they agreed to vote “FOR”
the merger proposal and “FOR” any other matters required to be approved by the Spirit shareholders in furtherance
of the merger proposal. For more information regarding the Spirit voting agreements, please see the section entitled “The
Merger Agreement—Voting Agreements.”
Opinion of Spirit’s
Financial Advisor
On September
23, 2021, Spirit engaged Stephens to act as financial adviser to Spirit and to render financial advisory and investment banking
services, including, if requested, to provide an opinion to the Spirit board of directors as to the fairness, from a financial
point of view, of the consideration to be received in any transaction pursued by Spirit. Spirit engaged Stephens because, among
other factors, Stephens is a nationally recognized investment banking firm with substantial experience in similar transactions.
As part of its investment banking business, Stephens is continually engaged in the valuation of financial services businesses
and their securities in connection with mergers and acquisitions.
As part of Stephens’
engagement, representatives of Stephens participated in a meeting of the Spirit board of directors held on November 18, 2021 in which
the Spirit board of directors evaluated the proposed merger. At this meeting, the Spirit board of directors requested and received reports,
discussion and commentary from its advisors, management and members regarding the proposed merger. As Spirit’s financial advisor
at that meeting, Stephens reviewed the financial aspects of the proposed merger and rendered its oral opinion, which was subsequently
confirmed by delivery of a written opinion to the Spirit board of directors dated November 18, 2021, that, as of such date, the consideration to be received by the Spirit shareholders (solely in their capacity as such) in the merger, as described herein,
which we refer to in this section as the merger consideration, was fair to them from a financial point of view, based upon and subject
to the qualifications, assumptions and other matters considered in connection with the preparation of its opinion.
The full text
of Stephens’ written opinion letter, which we refer to as the opinion letter, is attached as Annex C to this proxy
statement-prospectus. The opinion letter outlines the procedures followed, assumptions made, matters considered and qualifications
and limitations on the review undertaken by Stephens in rendering its opinion. The summary of the opinion set forth in this document
is qualified in its entirety by reference to the full text of such opinion letter. Investors are urged to read the entire opinion
letter carefully in connection with their consideration of the proposed merger. Spirit did not give any instruction to or impose
any limitations on Stephens as it related to the issuance of its opinion.
Stephens’
opinion speaks only as of the date of the opinion, and Stephens has undertaken no obligation to update or revise its opinion.
The opinion was directed to the Spirit board of directors (solely in its capacity as such) in connection with, and for purposes
of, its consideration of the merger. The opinion only addresses whether the merger consideration to be received by the
Spirit shareholders in the merger was fair, from a financial point of view, to them as of the date of the opinion. The opinion
does not address the underlying business decision of Spirit to engage in the merger or any other term or aspect of the merger
agreement or the transactions contemplated thereby. Stephens’ opinion does not constitute a recommendation to the Spirit
board of directors or any Spirit shareholder of as to how such person should vote or otherwise act with respect to the merger
or any other matter. Spirit and Simmons determined the merger consideration through a negotiation process.
In connection
with developing its opinion Stephens:
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reviewed
certain publicly available financial statements and reports regarding Spirit and Simmons;
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reviewed
certain audited financial statements regarding Spirit and Simmons;
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reviewed
certain internal financial statements, management reports and other financial and operating
data concerning Spirit and Simmons prepared by management of Spirit and Simmons, respectively;
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·
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reviewed,
on a pro forma basis, in reliance upon consensus research estimates and upon financial
projections and other information and assumptions concerning Spirit provided by the management
team of Spirit the effect of the merger on the balance sheet, capitalization ratios,
earnings and book value both in the aggregate and, where applicable, on a per share basis
of Spirit;
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reviewed
the reported prices and trading activity for the common stock of Spirit and Simmons;
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compared
the financial performance of Spirit and Simmons with that of certain other publicly-traded
companies and their securities that Stephens deemed relevant to Stephens’ analysis
of the merger;
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reviewed
the financial terms, to the extent publicly available, of certain merger or acquisition
transactions that Stephens deemed relevant to Stephens’ analysis of the merger;
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reviewed
the most recent draft of the merger agreement and related documents provided to Stephens
by Spirit;
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discussed
with management of Spirit the operations of and future business prospects for Spirit
and Simmons and the anticipated financial consequences of the merger to Spirit and Simmons;
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assisted
in Spirit’s deliberations regarding the material terms of the merger and Spirit’s
negotiations with Simmons; and
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performed
such other analyses and provided such other services as Stephens deemed appropriate.
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Stephens relied
on the accuracy and completeness of the information, financial data and financial forecasts provided to Stephens by Spirit and
Simmons and of the other information reviewed by Stephens in connection with the preparation of Stephens’ opinion, and the
opinion is based upon such information. Stephens did not independently verify or undertake any responsibility to independently
verify the accuracy or completeness of any of such information, data or forecasts. The management teams of Spirit and Simmons
assured Stephens that they were not aware of any relevant information that had been omitted or remained undisclosed to Stephens.
Stephens did not assume any responsibility for making or undertaking an independent evaluation or appraisal of any of the assets
or liabilities of Spirit or of Simmons, and Stephens was not furnished with any such evaluations or appraisals; nor did Stephens
evaluate the solvency or fair value of Spirit or of Simmons under any laws relating to bankruptcy, insolvency or similar matters.
Stephens did not assume any obligation to conduct any physical inspection of the properties, facilities, assets or liabilities
(contingent or otherwise) of Spirit or of Simmons. Stephens did not receive or review any individual loan or credit files nor
did Stephens make an independent evaluation of the adequacy of the allowance for loan and lease losses of Spirit or Simmons. Stephens
did not make an independent analysis of the effects of the COVID-19 pandemic or related market developments or disruptions, or
of any other disaster or adversity, on the business or prospects of Spirit or Simmons. With respect to the financial forecasts
prepared by Spirit and Simmons, including the forecasts of potential cost savings and potential synergies, Stephens also assumed
that such financial forecasts had been reasonably prepared and reflected the best then currently available estimates and judgments
of the management teams of Spirit and of Simmons as to the future financial performance of Spirit and of Simmons and provided
a reasonable basis for Stephens’ analysis. Stephens recognizes that such financial forecasts were based on numerous variables,
assumptions and judgments that are inherently uncertain (including, without limitation, factors related to general economic and
competitive conditions) and that actual results could vary significantly from such forecasts, and Stephens expresses no opinion
as to the reliability of such financial projections and estimates or the assumptions upon which they were based.
Stephens
does not provide legal, accounting, regulatory, or tax advice or expertise, and Stephens relied solely, and without independent
verification, on the assessments of Spirit and its other advisors with respect to such matters. Stephens assumed, with Spirit’s
consent, that the merger will not result in any materially adverse legal, regulatory, accounting or tax consequences for Spirit
or its shareholders and that any reviews of legal, accounting,
regulatory, or tax issues conducted as a result of the merger will
be resolved favorably to Spirit and its shareholders. Stephens does not express any opinion as to any tax or other consequences
that might result from the merger.
Stephens’
opinion was necessarily based upon market, economic and other conditions as they existed and could be evaluated on November 18,
2021, and on the information made available to Stephens as of the date thereof. It should be understood that subsequent developments
may affect the opinion and that Stephens did not undertake any obligation to update, revise or reaffirm the opinion or otherwise
comment on events occurring after November 18, 2021. Stephens further noted that the current volatility and disruption in the
credit and financial markets relating to, among other things, the COVID-19 pandemic, may or may not have an effect on Spirit or
Simmons, and Stephens did not express an opinion as to the effects of such volatility or such disruption on the merger or any
party to the merger. Stephens further expressed no opinion as to the prices at which shares of Simmons common stock or Spirit
common stock may trade at any time subsequent to the announcement of the merger.
In
connection with developing its opinion, Stephens assumed that, in all respects material to its analyses:
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(i)
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the
merger and any related transactions will be consummated on the terms of the latest draft
of the merger agreement provided to Stephens, without material waiver or modification;
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(ii)
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the
representations and warranties of each party in the merger agreement and in all related
documents and instruments referred to in the merger agreement are true and correct;
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(iii)
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each
party to the merger agreement and all related documents will perform all of the covenants
and agreements required to be performed by such party under such documents;
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(iv)
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all
conditions to the completion of the merger will be satisfied within the time frames contemplated
by the merger agreement without any waivers;
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(v)
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that
in the course of obtaining the necessary regulatory, lending or other consents or approvals
(contractual or otherwise) for the merger and any related transactions, no restrictions,
including any divestiture requirements or amendments or modifications, will be imposed
that would have a material adverse effect on the contemplated benefits of the merger
to the Spirit shareholders;
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(vi)
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there
has been no material change in the assets, liabilities, financial condition, results
of operations, business or prospects of Spirit or Simmons since the date of the most
recent financial statements made available to Stephens, and that no legal, political,
economic, regulatory or other development has occurred that will adversely impact Spirit
or Simmons; and
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(vii)
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the
merger will be consummated in a manner that complies with applicable law and regulations.
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Stephens’
opinion is limited to whether the merger consideration to be received by the Spirit shareholders in the merger is fair
to them from a financial point of view. Stephens was not asked to, and it did not, offer any opinion as to the terms of the merger
agreement or the form of the merger or any aspect of the merger, other than the fairness, from a financial point of view, of the merger consideration to be received in the merger by the Spirit shareholders. The opinion did not address the merits
of the underlying decision by Spirit to engage in the merger, the merits of the merger as compared to other alternatives potentially
available to Spirit or the relative effects of any alternative transaction in which Spirit might engage, nor is it intended to
be a recommendation to any person or entity as to any specific action that should be taken in connection with the merger, including
with respect to how to vote or act with respect to the merger. In addition Stephens’ opinion did not address, the fairness
to, or any other consideration of, holders of any class of securities, creditors or other constituencies of Spirit. Moreover,
Stephens did not express any opinion as to the fairness of the amount or nature of the compensation to any of Spirit’s officers,
directors or employees, or to any group of such officers, directors or employees, whether relative to the compensation to other
shareholders of Spirit or otherwise.
The
following is a summary of the material financial analyses performed and material factors considered by Stephens in connection
with its opinion. Stephens performed certain procedures, including each of the financial analyses described below, and reviewed
with Spirit’s executive management and the Spirit board of directors the assumptions upon which the analyses were based,
as well as other factors. Although this summary does not purport to describe all of the analyses performed or factors considered
by Stephens within this regard, it does set forth those considered by Stephens to be material in arriving at its opinion. The
preparation of a fairness opinion is a complex analytic process involving various determinations as to the appropriate and relevant
methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion
is not readily susceptible to partial analysis or summary description. The order of the summaries of analyses described does not
represent the relative importance or weight given to those analyses by Stephens. It should be noted that in arriving at its opinion,
Stephens did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments
as to the significance and relevance of each analysis and factor. Accordingly, Stephens believes that its analysis must be considered
as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors as a whole,
could create a misleading or incomplete view of the process underlying its opinion. The financial analyses summarized below include
information presented in tabular format. The tables alone do not constitute a complete description of the financial analyses.
Accordingly, Stephens’ analyses and the summary of its analyses must be considered as a whole, and selecting portions of
its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and
factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the
analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion.
Summary
of Proposed Transaction
Stephens
reviewed the financial terms of the merger. The merger agreement provided that collectively the Spirit shareholders and holders
of Spirit RSUs are expected to receive, in the aggregate, in exchange for their respective outstanding shares of Spirit common
stock and Spirit RSUs, 18,325,000 shares of Simmons common stock, subject to potential adjustments as described in the merger
agreement, including substituting cash for shares of Simmons common stock to the extent necessary to cash out Spirit stock options
and Spirit warrants that are outstanding immediately prior to the effective time of the merger. Based upon the unaudited financial
information of Spirit as of and for the twelve months ended September 30, 2021, and Simmons’ closing stock price and consensus
research estimates as of November 15, 2021, Stephens calculated the following per share transaction multiples:
Transaction
Value / Tangible Book Value per Share:
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1.87x
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Transaction
Value / Last Twelve Months, or LTM, Earnings per Share, or EPS:
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12.7x
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Transaction
Value / 2022 EPS:
|
15.4x
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Transaction
Value / 2023 EPS:
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14.0x
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Core
Deposit Premium per Share:
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12.0%
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Relevant
Nationwide Public Companies Analysis
Stephens
compared the financial condition, operating statistics and market valuation of Spirit to selected relevant public companies and
their stock trading prices. Stephens selected the companies outlined below because their relative asset size and financial performance,
among other factors, were reasonably similar to Spirit; however, no selected company below was identical or directly comparable
to Spirit. A complete analysis involves complex considerations and qualitative judgments concerning differences in financial and
operating characteristics and other factors that could affect the public trading values of the relevant public companies. Mathematical
analysis (such as determining the median) is not in itself a meaningful method of using relevant public company data.
Stephens
selected the following relevant nationwide public companies with assets between $2.5 billion and $3.5 billion and a return on
average assets greater than 0.50%, as of and for the LTM ended September 30, 2021, excluding merger targets:
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HomeTrust Bancshares, Inc.
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Bridgewater Bancshares, Inc.
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Farmers National Banc Corp.
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American National Bankshares
Inc.
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·
|
Old Second Bancorp, Inc.
|
|
·
|
West Bancorporation, Inc.
|
|
·
|
Peoples Financial Services
Corp.
|
|
·
|
Alerus Financial Corporation
|
|
·
|
Hingham Institution for Savings
|
|
·
|
First Community Bankshares,
Inc.
|
|
·
|
Capstar Financial Holdings,
Inc.
|
|
·
|
Red River Bancshares, Inc.
|
|
·
|
Guaranty Bancshares, Inc.
|
|
·
|
Civista Bancshares, Inc.
|
|
·
|
Macatawa Bank Corporation
|
|
·
|
Orrstown Financial Services,
Inc.
|
|
·
|
First Guaranty Bancshares,
Inc.
|
|
·
|
Southern First Bancshares,
Inc.
|
|
·
|
MetroCity Bankshares, Inc.
|
|
·
|
Southern Missouri Bancorp,
Inc.
|
|
·
|
Professional Holding Corp.
|
|
·
|
First Business Financial
Services, Inc.
|
|
·
|
The First Bancorp, Inc.
|
|
·
|
Western New England Bancorp,
Inc.
|
To perform
this analysis, Stephens examined publicly available financial information as of and for the LTM ended September 30, 2021, or the
most recently reported period available, and the market trading multiples of the relevant public companies based on November 15,
2021 closing prices. The financial data included in the table presented below may not correspond precisely to the data reported
in historical financial statements as a result of the assumptions and methods used by Stephens to compute the financial data presented.
The table below contains selected information utilized by Stephens in its analysis:
|
|
25th
|
|
75th
|
|
Spirit
|
Percentile
|
Median
|
Percentile
|
Tangible
Common Equity / Tangible Assets
|
9.9%
|
8.2%
|
9.0%
|
9.7%
|
Price
/ Tangible Book Value
|
1.44x
|
1.28x
|
1.41x
|
1.82x
|
Price
/ 2022 Estimated EPS
|
11.9x
|
10.7x
|
12.0x
|
13.7x
|
Price
/ 2023 Estimated EPS
|
10.8x
|
9.6x
|
11.2x
|
12.9x
|
|
|
|
|
|
Relevant
Texas Public Companies Analysis
Stephens
compared the financial condition, operating statistics and market valuation of Spirit to selected relevant Texas public companies
and their stock trading prices. Stephens selected the companies outlined below because their relative asset size and financial
performance, among other factors, were reasonably similar to Spirit; however, no selected company below was identical or directly
comparable to Spirit. A complete analysis involves complex considerations and qualitative judgments concerning differences in
financial and operating characteristics and other factors that could affect the public trading values of the relevant public companies.
Mathematical analysis (such as determining the median) is not in itself a meaningful method of using relevant public company data.
Stephens
selected the following relevant Texas public companies with assets less $8 billion, as of and for the LTM ended September 30,
2021, excluding Allegiance Bancshares, Inc., CBTX, Inc. and Triumph Bancorp, Inc.:
|
·
|
Southside Bancshares, Inc.
|
|
·
|
South Plains Financial, Inc.
|
|
·
|
Guaranty Bancshares, Inc.
|
|
·
|
Third Coast Bancshares, Inc.
|
To perform
this analysis, Stephens examined publicly available financial information as of and for the LTM ended September 30, 2021, or the
most recently reported period available, and the market trading multiples of the relevant public companies based on November 15,
2021 closing prices. The financial data included in the table presented below may not correspond precisely to the data reported
in historical financial statements as a result of the assumptions and methods used by Stephens to compute the financial data presented.
The table below contains selected information utilized by Stephens in its analysis:
|
|
25th
|
|
75th
|
|
Spirit
|
Percentile
|
Median
|
Percentile
|
Tangible
Common Equity / Tangible Assets
|
9.9%
|
9.0%
|
9.7%
|
9.9%
|
Price
/ Tangible Book Value
|
1.44x
|
1.29x
|
1.82x
|
1.92x
|
Price
/ 2022 Estimated EPS(1)
|
11.9x
|
12.1x
|
12.9x
|
14.0x
|
Price
/ 2023 Estimated EPS(1)
|
10.8x
|
10.7x
|
11.9x
|
13.4x
|
(1)
Excludes Third Coast Bancshares, Inc.
|
|
|
|
|
Relevant
Nationwide Transactions Analysis
Stephens
reviewed publicly available selected transaction multiples and related financial data for relevant nationwide transactions announced
since January 1, 2020 with a disclosed deal value, with target assets between $2 billion and $5 billion and with a LTM return
on average assets between 0.50% and 2.00%, excluding merger of equals transactions. The following transactions were considered
by Stephens because each acquired company’s relative asset size, financial performance and markets of operation, among other
factors, was reasonably similar to Spirit; however, no selected company below was identical or directly comparable to Spirit (in
each transaction, the acquirer is listed first, the target is listed second and the transaction announcement date is listed third):
|
·
|
First
Merchants Corporation / Level One Bancorp, Inc. (11/4/21)
|
|
·
|
Old
Second Bancorp, Inc. / West Suburban Bancorp, Inc. (7/26/21)
|
|
·
|
South
State Corporation / Atlantic Capital Bancshares, Inc. (7/23/21)
|
|
·
|
United
Community Banks, Inc. / Reliant Bancorp, Inc. (7/14/21)
|
|
·
|
F.N.B.
Corporation / Howard Bancorp, Inc. (7/13/21)
|
|
·
|
First
Foundation Inc. / TGR Financial, Inc. (6/3/21)
|
|
·
|
Glacier
Bancorp, Inc. / Altabancorp (5/18/21)
|
|
·
|
Enterprise
Financial Services Corp / First Choice Bancorp (4/26/21)
|
|
·
|
Provident
Financial Services, Inc. / SB One Bancorp (3/12/20)
|
Stephens
considered these selected transactions to be reasonably similar, but not identical or directly comparable, to the merger. A complete
analysis involves complex considerations and qualitative judgments concerning differences in the selected transactions and other
factors that could affect the transaction values in those selected transactions to which the merger is being compared. Mathematical
analysis (such as determining the median) is not in itself a meaningful method of using selected transaction data. To perform
this analysis, Stephens used the closing price of Simmons common stock on November 15, 2021. Stephens compared certain proposed
transaction multiples of the merger to the 25th percentile, median and 75th percentile transaction multiples
of the relevant transactions:
|
Spirit
|
25th
Percentile
|
Median
|
75th
Percentile
|
Target
LTM Return on Average Assets
|
1.47%
|
0.89%
|
1.28%
|
1.35%
|
Target
Tangible Common Equity/Tangible Assets
|
9.9%
|
8.4%
|
8.9%
|
9.3%
|
Transaction
Value Per Share/Tangible Book Value Per Share
|
1.87x
|
1.60x
|
1.81x
|
1.85x
|
Transaction
Value Per Share / LTM EPS
|
12.7x
|
10.4x
|
12.5x
|
17.2x
|
Core
Deposit Premium
|
12.0%
|
5.1%
|
9.0%
|
11.4%
|
Discounted
Cash Flow Analysis
Stephens
performed a discounted cash flow analysis using analyst consensus EPS and total assets for the remainder of 2021 through 2023,
and then 8% growth thereafter as instructed by Spirit’s executive management team and then calculated a range of implied
equity values for Spirit based upon the discounted net present value of the projected after-tax free cash flows for the projected
period. Stephens determined the amount of cash flow assuming (i) a terminal earnings multiple of 12.0x, (ii) dividend payments
for earnings and excess capital above a tangible common equity to tangible asset ratio of 9.0% from 2021 to 2025 and (iii) the
present value of Spirit’s implied terminal value at the end of such period. Stephens calculated the terminal value of Spirit
based on 2026 estimated earnings and multiples of 11.0x to 13.0x. Stephens considered discount rates from 9.0% to 11.0%. Based
on this analysis, Stephens derived a range for the implied equity value of Spirit from $25.57 per share to $31.28 per share.
The
discounted cash flow analysis is a widely used valuation methodology, but the results of this methodology are highly dependent
on the assumptions that must be made, including asset and earnings growth rates, terminal values, capital levels, and discount
rates. The analysis did not purport to be indicative of the actual values or expected values of Spirit.
With
respect to each of the analyses described above, the actual results may vary from the projected results, and the variations may
be material.
Financial
Impact Analysis
Stephens
analyzed the estimated merger consequences of certain pro forma combined income statement and balance sheet information of Spirit
and Simmons. Stephens discussed with management of Spirit and Simmons key assumptions regarding the expected accounting treatment,
potential cost savings and other acquisition adjustments resulting from the merger. Stephens’ analysis utilized consensus
earnings estimates for Spirit and Simmons as of November 15, 2021. Based on this analysis, Stephens estimated that the merger
would likely be accretive to Simmons’ consensus EPS following the closing of the merger. Stephens also estimated that Simmons
would maintain capital ratios in excess of those required by Simmons to be considered well-capitalized under existing regulations.
Like the discounted cash flow analysis, the financial impact analysis is highly dependent upon the assumptions that must be made,
including with respect to earnings estimates, cost savings and other
matters. Accordingly, the actual results achieved by the
combined company following the merger may vary from the projected results, and the variations may be material.
Miscellaneous
The
preparation of a fairness opinion is a complex process and is not susceptible to a partial analysis or summary description. Stephens
believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering the
analyses taken as a whole, would create an incomplete view of the process underlying its opinion. In addition, Stephens considered
the results of all such analyses and did not assign relative weights to any of the analyses, but rather made qualitative judgments
as to significance and relevance of each analysis and factor, so the results from any particular analysis described above should
not be taken to be the view of Stephens.
In performing
its analyses, Stephens made numerous assumptions with respect to industry performance, general business, economic and regulatory
conditions and other matters, many of which are beyond the control of Spirit. The analyses performed by Stephens are not necessarily
indicative of actual values, trading values or actual future results which might be achieved, all of which may be significantly
more or less favorable than suggested by such analyses. The analyses do not purport to be appraisals or to reflect the prices
at which companies may actually be sold, and such estimates are inherently subject to uncertainty.
Stephens
is serving as financial adviser to Spirit in connection with the merger and is entitled to receive a fee from such services in
an amount equal to 1.15% of the aggregate consideration paid in connection with the merger, a significant portion of which is
contingent upon the consummation of the merger. Stephens also received an $800,000 fee from Spirit upon rendering its fairness
opinion, which opinion fee will be credited in full against the fee which will become payable to Stephens upon the closing of
the merger. Stephens would also be entitled to a fee under certain circumstances following a termination of the merger agreement.
Spirit has also agreed to indemnify Stephens against certain claims and liabilities arising out of Stephens’ engagement
and to reimburse Stephens for certain of its out-of-pocket expenses incurred in connection with the engagement.
Stephens
did not receive any fees for providing investment banking or other services to Spirit within the past two years; however, just
over two years ago, Stephens served as financial advisor to Spirit in connection with its acquisition of Chandler Bancorp, Inc.,
for which Stephens received customary fees.
During
the two years preceding the date of this letter, Stephens served as financial advisor to Simmons in connection with the acquisitions
of Landmark Community Bank and Triumph Bancshares, Inc. and the sale by Simmons of five branch locations to Spirit, and Stephens
received customary fees in connection with such transactions, and, just over two years ago, Stephens served as financial advisor
to Simmons in connection with the acquisition of Landrum Company, for which Stephens also received customary fees.
In
the ordinary course of its business, Stephens Inc. and its affiliates and employees at any time may hold long or short positions,
and may trade or otherwise effect transactions as principal or for the accounts of customers, in debt, equity or derivative securities
of participants in the merger.
SIMMONS
ANNUAL MEETING SHAREHOLDER PROPOSALS
Simmons
shareholders who intend to submit proposals pursuant to Rule 14a-8 of the Exchange Act to be presented at Simmons’ 2022
Annual Meeting of Shareholders and included in Simmons’ proxy statement relating to such meeting must have submitted such
proposals to the Corporate Secretary of Simmons at Simmons’ principal executive offices no later than December 16, 2021.
Such proposals must also comply with the additional requirements of Rule 14a-8 of the Exchange Act (or any successor rule) to
be eligible for inclusion in the proxy statement for Simmons’ 2022 Annual Meeting of Shareholders.
In addition,
the Simmons bylaws provide that only such business (including, without limitation, the nomination of persons for election to the
Simmons board of directors) which is properly brought before a Simmons shareholder meeting will be conducted. For business (including,
without limitation, the nomination of persons for election to the Simons board of directors) to be properly brought before an
annual meeting of Simmons shareholders by a Simmons shareholder, the shareholder must provide notice to the Corporate Secretary
of Simmons at Simmons’ principal executive offices not later than 90 days nor earlier than 120 days prior to the first anniversary
of the prior year’s annual meeting of Simmons shareholders. In the event that Simmons did not hold an annual meeting of
the shareholders in the prior year or if the first anniversary of the prior year’s annual meeting of Simmons shareholders
is more than 30 days before or after the date of the current year’s annual meeting of Simmons shareholders, the shareholder’s
notice is timely only if it is delivered to the Corporate Secretary of Simmons at the principal executive offices of Simmons no
later than the 10th day after Simmons publicly announces the date of the current year’s annual meeting of Simmons shareholders
or the 90th day before the date of the current year’s annual meeting of Simmons shareholders, whichever is later. To be
in proper written form, a shareholder’s notice to Simmons’ Corporate Secretary must comply with all requirements contained
in the Simmons bylaws, a copy of which may be obtained upon written request to the Corporate Secretary of Simmons.
Accordingly,
a Simmons shareholder who intended to raise a proposal to be acted upon at Simmons’ 2022 Annual Meeting of Shareholders,
but who did not desire to include the same in Simmons’ 2022 proxy statement, must have provided written notice to Simmons’
Corporate Secretary no earlier than January 20, 2022 nor later than February 19, 2022. The persons named as proxies in Simmons’
proxy for Simmons’ 2022 Annual Meeting of Shareholders may exercise their discretionary authority to act upon any proposal
which is properly brought before a shareholder meeting, and Simmons reserves the right to reject, rule out of order or take other
appropriate action with respect to any proposal that does not comply with these and other applicable requirements.
SPIRIT
ANNUAL MEETING SHAREHOLDER PROPOSALS
If the
merger is consummated, the separate corporate existence of Spirit will terminate and there will be no future meetings of Spirit
shareholders. If the merger is consummated in the second quarter of 2022, as is currently anticipated, Spirit will not expect
to hold its 2022 annual meeting of Spirit shareholders. However, if the merger is not consummated within the anticipated time
frame, or at all, Spirit may hold an annual meeting of Spirit shareholders in 2022.
Spirit
shareholders who, in accordance with Rule 14a-8 under the Exchange Act, desire to submit a shareholder proposal for inclusion
in the proxy statement to be distributed to Spirit shareholders in connection with the 2022 annual meeting of Spirit shareholders,
such proposal and supporting statements, if any, must have been received by Spirit at Spirit’s principal executive office
no later than December 17, 2021. Any such proposal must comply with the requirements of Rule 14a-8.
In addition,
the Spirit bylaws provide that only such business which is properly brought before a shareholder meeting will be conducted. For
business, other than nomination of directors, to be properly brought before a meeting, notice must be received by Spirit’s
corporate secretary at the address below not less than 75 nor more than 100 calendar days prior to the first anniversary of the
preceding year’s annual meeting. Spirit’s corporate secretary, therefore, must receive notice of any business to be
considered at the 2022 annual meeting of Spirit shareholders, no earlier than February 16, 2022 and no later than March 13, 2022.
Additionally, for nominations of persons for election to the board of directors to be properly made at a meeting by a shareholder,
notice must be received by Spirit’s corporate secretary at the address below not less than 75 nor more than 100 calendar
days prior to the first anniversary of the preceding year’s annual meeting. Spirit’s corporate secretary, therefore,
must receive notice of shareholder nomination for candidates no earlier than February 16, 2022 and no later than March 13, 2022.
However,
in the case of shareholder proposals and shareholder nominations, if the date of an annual meeting is advanced more than 50 calendar
days prior to such anniversary date, then the notice must be received no later than the close of business on the 10th calendar
day following the day on which such notice of the date of the annual meeting was first mailed or public disclosure of the date
of the annual meeting was first made, whichever first occurs. All notices to Spirit must also provide certain information set
forth in the Spirit bylaws. A copy of the Spirit bylaws may be obtained upon written request to Spirit’s corporate secretary.
Shareholder
proposals and nominations should be submitted to Spirit’s corporate secretary at Spirit of Texas Bancshares, Inc., Attention:
Corporate Secretary, 1836 Spirit of Texas Way, Conroe, Texas 77301.
WHERE
YOU CAN FIND MORE INFORMATION
Simmons
has filed with the SEC a registration statement under the Securities Act that registers the offer and sale to Spirit shareholders
of the shares of Simmons common stock to be issued in connection with the merger. This proxy statement/prospectus is a part of
that registration statement and constitutes the prospectus of Simmons in addition to being a proxy statement for Spirit shareholders.
The registration statement, including this proxy statement/prospectus and the attached exhibits, contains additional relevant
information about Simmons and Simmons common stock.
Simmons
and Spirit also file reports, proxy statements and other information with the SEC under the Exchange Act.
The SEC
maintains a website that contains reports, proxy statements and other information about issuers, such as Simmons and Spirit, that
file electronically with the SEC. The address of the site is www.sec.gov. The reports and other information filed by Simmons with
the SEC are also available at Simmons’ website at www.simmonsbank.com and Spirit’s website at www.sotb.com. The website
addresses of the SEC, Simmons and Spirit are included as inactive textual references only. Except as specifically incorporated
by reference into this proxy statement/prospectus, information on those websites is not part of this proxy statement/prospectus.
The SEC
allows Simmons and Spirit to incorporate by reference information in this proxy statement/prospectus. This means that Simmons
and Spirit can disclose important information to you by referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this proxy statement/prospectus, except for any information that is superseded
by information that is included directly in this proxy statement/prospectus.
This proxy
statement/prospectus incorporates by reference the documents listed below that Simmons and Spirit previously filed with the SEC.
They contain important information about the companies and their financial condition.
Simmons
SEC Filings (SEC File No. 000-06253)
|
|
Period
or Date Filed
|
Annual Report
on Form 10-K (including the portions of Simmons’ Definitive Proxy Statement on Schedule 14A, filed with the SEC on April
15, 2021, incorporated by reference therein)
|
|
Year ended December 31, 2020, filed with the SEC on February 25, 2021.
|
|
|
|
Quarterly
Reports on Form 10-Q
|
|
Quarter
ended March 31, 2021, filed with the SEC on May 6, 2021, Quarter ended June 30, 2021, filed with the SEC on August 6, 2021
and Quarter ended September 30, 2021, filed with the SEC on November 5, 2021.
|
|
|
|
Current
Reports on Form 8-K
|
|
Filed
with the SEC on March 3, 2021, April 1, 2021, April 22, 2021, May 21, 2021, May 25, 2021, June 7, 2021, July 27, 2021, August 5, 2021, October 12, 2021 and November 19, 2021 (other than those portions of the documents deemed to be furnished and not
filed).
|
|
|
|
Description
of Simmons common stock
|
|
The
description of the Simmons common stock is contained in Simmons’ registration statement filed on March 31, 2021 set forth in the section entitled “Description of Common Stock,” as
updated and amended from time to time.
|
|
|
|
Spirit
SEC Filings (SEC File No. 001-38484)
|
|
Period
or Date Filed
|
Annual
Report on Form 10-K (including the portions of Spirit’s Definitive Proxy Statement on Schedule 14A, filed with
the SEC on April 9, 2021, incorporated by reference therein)
|
|
Year ended December 31, 2020, filed with the SEC on March 5, 2021.
|
|
|
|
Quarterly
Reports on Form 10-Q
|
|
Quarter ended March 31, 2021, filed with the SEC on April 30, 2021, Quarter ended June 30, 2021, filed with the SEC on August 6, 2021
and Quarter ended September 30, 2021, filed with the SEC on November 5, 2021.
|
|
|
|
Current
Reports on Form 8-K
|
|
Filed
with the SEC on January 11, 2021,
February 26, 2021, March
16, 2021, May 28, 2021,
June 15, 2021, June
16, 2021, August 20,
2021, November 19, 2021,
November 24, 2021 and
January 4, 2022 (other than those portions of the documents deemed to be furnished and not filed).
|
|
|
|
Description
of Spirit common stock
|
|
The
description of the Spirit common stock is contained in Spirit’s prospectus filed pursuant to Rule 424(b)(5) under the Securities Act on July 25, 2019 set forth under the heading “Description of Common Stock,” as updated and amended
from time to time.
|
|
|
|
In addition,
Simmons and Spirit also incorporate by reference additional documents that they file with the SEC under Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act between the date of this proxy statement/prospectus and the date the offering is terminated,
provided that Simmons and Spirit are not incorporating by reference any information furnished to, but not filed with, the SEC.
Documents
incorporated by reference into this proxy statement/prospectus are available from Simmons or Spirit, as applicable, without charge,
excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference as an exhibit in this proxy
statement/prospectus. You can obtain documents incorporated by reference into this proxy statement/prospectus or other relevant
corporate documents referenced in this proxy statement/prospectus related to Simmons by requesting them in writing or by telephone
at the following address and phone number:
Simmons
First National Corporation
601 E. 3rd
Street, 12th Floor
Little Rock, Arkansas 72201
Attention: Ed Bilek
Telephone: (870) 541-1000
|
Spirit
of Texas Bancshares, Inc.
1836
Spirit of Texas Way
Conroe,
Texas 77301
Attention:
Jerry D. Golemon
Telephone:
(936) 521-1836
|
If you
are a Spirit shareholder and have any questions concerning the Spirit special meeting, the merger, the merger agreement or the
proxy statement/prospectus, would like additional copies of the proxy statement/prospectus without charge or need help voting
your shares of Spirit common stock, please contact Spirit at the address above.
These
documents are available without charge upon written or oral request. To obtain timely delivery of these documents, you must request
them no later than February 16, 2022 in order to receive them before the Spirit special meeting. If you request any documents
from Simmons or Spirit, Simmons or Spirit will mail them to you by first class mail, or another equally prompt means, within one
business day after receiving your request.
No one has been
authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document.
This document is dated January 20, 2022 and you should assume that the information in this document is accurate only as of such
date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document.
Neither the mailing of this document to Spirit shareholders nor the issuance by Simmons of shares of Simmons common stock in connection
with the merger will create any implication to the contrary.
This
proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the
solicitation of a proxy, in any jurisdiction to or from any person to whom or from whom it is unlawful to make any such offer
or solicitation in that jurisdiction. Except where the context otherwise indicates, information contained in this document
regarding Simmons has been provided by Simmons and information contained in this document regarding Spirit has been provided by
Spirit.
Annex
A
AGREEMENT
AND PLAN OF MERGER
BY AND BETWEEN
SIMMONS FIRST
NATIONAL CORPORATION
AND
SPIRIT OF
TEXAS BANCSHARES, INC.
Dated as of
November 18, 2021
TABLE
OF CONTENTS
Exhibit A - Form of Seller
Voting Agreement
Seller’s Disclosure Memorandum
Buyer’s Disclosure Memorandum
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of November 18, 2021, by and
between Simmons First National Corporation, an Arkansas corporation (“Buyer”), and Spirit of Texas Bancshares,
Inc., a Texas corporation (“Seller”).
Preamble
The
respective boards of directors of Seller and Buyer have approved and adopted this Agreement and determined that this Agreement
and the transactions contemplated hereby are advisable and in the best interests of their respective companies and their respective
shareholders. Under the terms and subject to the conditions of this Agreement and in accordance with applicable provisions of
the Arkansas Business Corporation Act of 1987 (the “ABCA”) and the Texas Business Organizations Code (the “TBOC”),
Seller will merge with and into Buyer (the “Merger”), with Buyer as the surviving corporation in the Merger
(sometimes referred to in such capacity as the “Surviving Corporation”).
As
a condition and an inducement for Buyer to enter into this Agreement, each of the directors and certain executive officers of
Seller has simultaneously with the execution of this Agreement entered into a Support and Non-Competition Agreement (each a “Voting
Agreement” and collectively, the “Voting Agreements”) in connection with the Merger, in substantially
the form of Exhibit A.
The
Parties intend that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal
Revenue Code, and the Parties intend that this Agreement will be, and hereby is, adopted as a “plan of reorganization”
within the meaning of Section 368(a) of the Internal Revenue Code and Treasury Regulation Sections 1.368-2(g) and 1.368-3(a) for
purposes of Sections 354, 356 and 361 of the Internal Revenue Code (and any comparable provision of state or local Law) for federal
income tax purposes (and applicable state and local income tax purposes).
The
Parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger.
Capitalized
terms used in this Agreement and not otherwise defined herein are defined in Section 10.1 of this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual warranties, representations, covenants, and agreements set forth
herein, and intending to be legally bound hereby, the Parties agree as follows:
ARTICLE
1
TRANSACTIONS AND TERMS OF MERGER
1.1. Merger.
Under
the terms and subject to the conditions of this Agreement, at the Effective Time, Seller shall be merged with and into Buyer in
accordance with applicable provisions of the ABCA and the TBOC with the effects set forth in the ABCA and the TBOC. Buyer shall
be the surviving corporation resulting from the Merger, and shall succeed to and assume all the rights and obligations of Seller
in accordance with the ABCA and the TBOC. Upon consummation of the Merger, the separate corporate existence of Seller shall terminate.
1.2.
Time and Place of Closing.
The
closing of the transactions contemplated hereby (the “Closing”) will take place at the offices of Buyer, located
at 601 E. 3rd Street, Little Rock, Arkansas, 72201, or by electronic exchange of documents at 10:00 A.M., Central Time,
on the date that the Effective Time occurs, or at such other date and time as the Parties, acting through their authorized officers,
may mutually agree in writing (the “Closing Date”).
1.3. Effective
Time.
The
Merger shall become effective (the “Effective Time”) on the date and at the time specified in the articles
of merger to be filed with the Secretary of State of the State of Arkansas and the certificate of merger to be filed with the
Secretary of State of the State of Texas. Upon the terms and subject to the conditions hereof, unless otherwise mutually agreed
upon in writing by the authorized officers of each Party, the Parties shall cause the Effective Time to occur by the later of
(i) April 8, 2022, or (ii) a date within 30 days following satisfaction or waiver (subject to applicable Law) of the last to occur
of the conditions set forth in ARTICLE 8 (other than those conditions that by their nature are to be satisfied or waived at the
Effective Time) as determined by Buyer.
1.4. Charter.
The
Amended and Restated Articles of Incorporation of Buyer in effect immediately prior to the Effective Time shall be the articles
of incorporation of the Surviving Corporation until duly amended or repealed in accordance with its terms and applicable Law.
1.5. Bylaws.
The
Bylaws of Buyer in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until duly
amended or repealed in accordance with its terms and applicable Law.
1.6. Directors
and Officers.
The
directors of Buyer in office immediately prior to the Effective Time shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the bylaws of the Surviving Corporation. The officers of Buyer in office
immediately prior to the Effective Time shall serve as the officers of the Surviving Corporation from and after the Effective
Time in accordance with the bylaws of the Surviving Corporation.
1.7. Bank
Merger.
Immediately
following the Merger, Seller Bank will merge with and into Buyer Bank (the “Bank Merger”). Buyer Bank shall
be the surviving entity (“Surviving Entity”) in the Bank Merger. Following the Bank Merger, the separate corporate
existence of Seller Bank shall terminate. The Parties agree that the Bank Merger shall become effective immediately following
the Effective Time. The Bank Merger shall be implemented pursuant to a subsidiary plan of merger (the “Subsidiary Plan
of Merger”). In order to obtain the necessary regulatory approvals for the Bank Merger, the Parties shall cause the
following to be accomplished prior to the filing of applications for regulatory approval of the Bank Merger: (i) Seller shall
cause Seller Bank to approve the Subsidiary Plan of Merger, Seller as the sole shareholder of Seller Bank, shall approve the Subsidiary
Plan of Merger and Seller shall cause the Subsidiary Plan of Merger to be duly executed by Seller Bank and delivered to Buyer
Bank and (ii) Buyer shall cause Buyer Bank to approve the Subsidiary Plan of Merger, Buyer as the sole shareholder of Buyer Bank,
shall approve the Subsidiary Plan of Merger and Buyer shall cause Buyer Bank to duly execute and deliver the Subsidiary Plan of
Merger to Seller Bank. Prior to the Effective Time, Seller shall cause Seller Bank, and Buyer shall cause Buyer Bank, to execute
and file such articles of merger, required merger certificates, and such other documents and certificates as are necessary to
make the Bank Merger effective immediately following the Effective Time.
ARTICLE
2
MANNER OF CONVERTING SHARES
2.1. Conversion
of Shares.
Subject
to the provisions of this ARTICLE 2, at the Effective Time, by virtue of the Merger and without any action on the part of Buyer,
Seller or the shareholders of either of the foregoing, the shares of Seller and Buyer shall be converted as follows:
(a)
Each share of capital stock of Buyer issued and outstanding immediately prior to the Effective Time shall remain an issued and
outstanding share of capital stock of Buyer from and after the Effective Time and shall not be affected by the Merger.
(b)
Each share of Seller capital stock issued and outstanding immediately prior to the Effective Time that is held by Seller, any
Seller Subsidiary, Buyer or any Buyer Subsidiary (in each case other than shares held in any Employee Benefit Plans or related
trust accounts or otherwise held in any fiduciary or agency capacity or as a result of debts previously contracted) (collectively,
the “Canceled Shares”) shall automatically be canceled and retired and shall cease to exist, and no payment
shall be made with respect thereto.
(c)
Each share of Seller Common Stock issued and outstanding immediately prior to the Effective Time (excluding the Canceled Shares
and the Seller Dissenting Shares), subject to Section 2.3(c), shall be converted into the right to receive, without interest,
the Per Share Stock Consideration.
(d)
Each share of Seller Common Stock, when so converted pursuant to Section 2.1(c), shall automatically be canceled and retired and
shall cease to exist as of the Effective Time, and each certificate (an “Old Certificate”, it being understood
that any reference herein to “Old Certificate” shall be deemed to include reference to book-entry account statements
relating to ownership of shares of Seller Common Stock (a “Book-Entry Share”)) registered in the transfer books
of Seller that immediately prior to the Effective Time represented shares of Seller Common Stock shall thereafter cease to have
any rights with respect to such Seller Common Stock other than the right to receive the Merger Consideration in accordance with
ARTICLE 3.
2.2. Anti-Dilution
Provisions.
In
the event Buyer changes the number of shares of Buyer Common Stock issued and outstanding between the date of this Agreement and
the Effective Time as a result of a stock split, stock dividend, or recapitalization or similar corporate action with respect
to such stock and the record date therefor (in the case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established) shall be between the date of this Agreement and
the Effective Time, the Merger Consideration shall be equitably and proportionately adjusted, if necessary and without duplication,
to reflect fully the effect of any such change.
2.3. Treatment
of Seller Equity Rights.
(a)
At the Effective Time, each option granted by Seller to purchase shares of Seller Common Stock under Seller’s ST Financial
Group, Inc. 2008 Stock Plan and Seller’s ST Financial Group, Inc. 2017 Stock Incentive Plan (each as amended from time to
time), whether vested or unvested, that is outstanding and unexercised immediately prior to the Effective Time (a “Seller
Stock Option”) shall be canceled and converted into the right to receive from Buyer a cash payment (“Seller
Stock Option Payout”) equal to the applicable Seller Stock Option Amount. Notwithstanding the foregoing, any Seller
Stock Option with an Option Exercise Price that equals or exceeds the Fully Diluted Per Share Value shall be canceled with no
consideration being paid to the optionholder with respect to such Seller Stock Option. Buyer and Seller shall work cooperatively
to facilitate the Seller Stock Option Payouts.
(b)
At the Effective Time, each warrant granted by Seller to purchase shares of Seller Common Stock under the Seller Warrant Agreements,
whether vested or unvested, that is outstanding and unexercised immediately prior to the Effective Time (a “Seller Warrant”)
shall be canceled and converted into the right to receive from Buyer a cash payment (“Seller Warrant Payout”)
equal to the applicable Seller Warrant Amount, all in accordance with the Warrant Cancellation Agreements. Notwithstanding the
foregoing, any Seller Warrant with a Warrant Exercise Price that equals or exceeds the Fully Diluted Per Share Value shall be
canceled with no consideration being paid to the warrantholder with respect to such Seller Warrant. Buyer and Seller shall work
cooperatively to facilitate the Seller Warrant Payouts.
(c)
Notwithstanding anything herein to the contrary, if, before giving effect to this Section 2.3(c), the Cash Consideration would
be less than $0.00, then (i) the Aggregate Cash Consideration shall be increased such that the Cash Consideration equals $0.00
(the amount by which the Aggregate Cash Consideration is increased shall be referred to as the “Aggregate Cash Increase”)
and (ii) the Stock Consideration shall be decreased by the number of shares of Buyer Common Stock equal to the quotient obtained
by dividing the Aggregate Cash Increase by the Average Closing Price (for the avoidance of doubt, if the quotient includes a fractional
share, then the quotient shall be rounded up to the next whole share (for example, if the quotient is 1,000.34, then the quotient
shall be rounded up to 1,001)). The foregoing adjustments and the effects thereof (based on certain assumptions) are illustrated
in Section 2.3(c) of Buyer’s Disclosure Memorandum.
(d)
At the Effective Time, each unit in respect of a share of Seller Common Stock subject to vesting, repurchase, performance or other
lapse restriction under Seller’s ST Financial Group, Inc. 2017 Stock Incentive Plan (as amended from time to time) that
is outstanding immediately prior to the Effective Time (a “Seller Restricted Stock Unit”) shall fully vest
and shall be canceled and converted into the right to receive the Per Share Stock Consideration payable pursuant to Section 2.1(c),
treating the Seller Restricted Stock Units as if they are shares of Seller Common Stock for such purposes.
(e)
Without limiting Section 7.8 hereof, the board of directors of Seller or any committee thereof, as applicable, shall, prior to
the Closing and effective as of no later than the day immediately prior to, and contingent upon, the Closing (or such earlier
time as may be applicable), adopt any resolutions and take any actions (which may include allowing holders of Seller Stock Options
an opportunity to exercise such Seller Stock Options), and cause any actions to be taken, that are necessary or, in the reasonable
determination of Buyer, advisable to effectuate the provisions of this Section 2.3, including having all holders of Seller Warrants
execute a Warrant Cancellation Agreement to effectuate the provision in Section 2.3(b) and so that upon the Effective Time, there
are no outstanding Seller Warrants.
2.4. Fractional
Shares.
No
certificate, book-entry share or scrip representing fractional shares of Buyer Common Stock shall be issued upon the surrender
for exchange of Old Certificates (or the exchange of Seller Restricted Stock Units), no dividend or distribution with respect
to Buyer Common Stock shall be payable on or with respect to any such fractional share interests, and such fractional share interests
will not entitle the owner thereof to vote or to any other rights of a shareholder of Buyer. Notwithstanding any other provision
of this Agreement, each holder of shares of Seller Common Stock or Seller Restricted Stock Units exchanged pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a share of Buyer Common Stock (after taking into account all Old
Certificates delivered, and all Seller Restricted Stock Units held, by such Holder) shall receive, in lieu thereof, a cash payment
rounded up to the nearest whole cent (without interest), which payment shall be determined by multiplying (i) the fraction of
a share (rounded to the nearest thousandth when expressed in decimal form) of Buyer Common Stock that such holder of shares of
Seller Common Stock or Seller Restricted Stock Units would otherwise have been entitled to receive pursuant to Sections 2.1(c)
and 2.3(d) by (ii) the Average Closing Price (the “Fractional Share Payment”).
ARTICLE
3
EXCHANGE OF SHARES
3.1. Exchange
Procedures.
(a)
Deposit of Exchange Fund. At or promptly following the Effective Time, Buyer shall deposit, or shall cause to be deposited,
with Computershare, Buyer’s transfer agent, or another exchange agent reasonably acceptable to Buyer (the “Exchange
Agent”), for the benefit of the holders of record of shares of Seller Common Stock (excluding the Canceled Shares) issued
and outstanding immediately prior to the Effective Time and the holders of record of Seller Restricted Stock Units (collectively,
the “Holders”), for exchange in accordance with this ARTICLE 3, (i) certificates or, at Buyer’s option,
evidence of Buyer Common Stock in book-entry form issuable pursuant to Section 2.1(c) (collectively referred to as “Buyer
Certificates”) for shares of Buyer Common Stock equal to the Stock Consideration (for the avoidance of doubt, as may
be adjusted under Section 2.3(c)) and (ii) immediately available funds for (A) any Fractional Share Payments to the extent then
determinable and (B), after the Effective Time, if applicable, any dividends or distributions which such Holders have the right
to receive pursuant to Section 3.1(d) (collectively, the “Exchange Fund”). Buyer shall instruct the Exchange
Agent to timely pay the Exchange Fund in accordance with this Agreement. The cash portion of the Exchange Fund shall be invested
by the Exchange Agent as directed by Buyer or the Surviving Corporation. Interest and other income on the Exchange Fund shall
be the sole and exclusive property of Buyer and the Surviving Corporation and shall be paid to Buyer or the Surviving Corporation,
as Buyer directs. No investment of the Exchange Fund shall relieve Buyer, the Surviving Corporation or the Exchange Agent from
making the payments required by this Agreement and following any losses from any such investment, Buyer shall promptly provide
additional funds to the Exchange Agent to the extent necessary to satisfy Buyer’s obligations hereunder for the benefit
of the Holders, which additional funds will be deemed to be part of the Exchange Fund.
(b)
Delivery of Merger Consideration. As soon as reasonably practicable after the Effective Time, the Exchange Agent shall
mail to each Holder of an Old Certificate that is not a Book-Entry Share (but including an Old Certificate that is a Book-Entry
Share, as well as a Seller Restricted Stock Unit, if required by the Exchange Agent or at the request of Buyer) a notice advising
such Holders of the effectiveness of the Merger, including a customary letter of transmittal specifying that delivery shall be
effected, and risk of loss and title to the Old Certificates (including Book-Entry Shares, if applicable) shall pass, only upon
proper delivery of the Old Certificates (including Book-Entry Shares, if applicable), and instructions for surrendering the Old
Certificates (including Book-Entry Shares, if applicable), to the Exchange Agent (such materials and instructions to include customary
provisions with respect to delivery of an “agent’s message” with respect to Book-Entry Shares). Upon proper
surrender of an Old Certificate (including Book-Entry Shares, if applicable), for exchange and cancellation to the Exchange Agent,
together with the appropriate transmittal materials, duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the Holder of such Old Certificate shall be entitled
to receive in exchange therefor the Merger Consideration and such Old Certificate so surrendered shall forthwith be canceled.
No interest will be paid or accrued for the benefit of Holders on the Merger Consideration payable upon the surrender of the Old
Certificates. The Per Share Stock Consideration delivered to each Holder shall be in non-certificated book-entry form.
(c)
Share Transfer Books. At the Effective Time, the share transfer books of Seller shall be closed, and thereafter there shall
be no further registration of transfers of shares of Seller Common Stock. From and after the Effective Time, Holders who held
shares of Seller Common Stock immediately prior to the Effective Time shall cease to have rights with respect to such shares,
except as otherwise provided for herein. Until surrendered for exchange in accordance with the provisions of this Section 3.1,
each Old Certificate (including, for the avoidance of doubt, each Book-Entry Share) theretofore representing shares of Seller
Common Stock (other than the Canceled Shares) shall from and after the Effective Time represent for all purposes only the right
to receive the consideration provided in this Agreement in exchange therefor. On or after the Effective Time, any Old Certificates
presented to the Exchange Agent, Buyer or the Surviving Corporation for any reason shall be canceled and exchanged for the Merger
Consideration.
(d)
Dividends with Respect to Buyer Common Stock. No dividends or other distributions declared with respect to Buyer Common
Stock with a record date after the Effective Time shall be paid to the Holder of any unsurrendered Old Certificate with respect
to the whole shares of Buyer Common Stock issuable with respect to such Old Certificate in accordance with this Agreement until
the surrender of such Old Certificate (or affidavit of loss in lieu thereof) in accordance with this Agreement. Subject to applicable
Laws, following surrender of any such Old Certificate (or affidavit of loss and other documentation required by the Exchange Agent,
Buyer, or the Surviving Corporation hereunder in lieu thereof) there shall be paid to the record holder of the whole shares of
Buyer Common Stock, if any, issued in exchange therefor, without interest, (i) all dividends and other distributions payable in
respect of any such whole shares of Buyer Common Stock with a record date after the Effective Time and a payment date on or prior
to the date of such surrender and not previously paid and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such surrender and with a payment date subsequent to such
surrender payable with respect to such shares of Buyer Common Stock.
(e)
Termination of Exchange Fund. Any portion of the Exchange Fund (including any interest and other income received with respect
thereto) which remains undistributed to the former Holders on the first anniversary of the Effective Time shall be delivered to
Buyer; and any former Holders who have not theretofore received any Merger Consideration to which they are entitled under this
Agreement shall thereafter look only to Buyer and the Surviving Corporation for payment of their claims with respect thereto.
(f)
No Liability. If any Old Certificates shall not have been surrendered (or canceled) prior to three years after the Effective
Time (or immediately prior to such earlier date on which the Merger Consideration would escheat to or become the property of any
Regulatory Authority), any such Merger Consideration in respect thereof shall, to the extent permitted by applicable Law, become
the property of Buyer, free and clear of all claims or interest of any Person previously entitled thereto or their successors,
assigns, or personal representatives. None of Buyer, Seller, the Surviving Corporation or the Exchange Agent, or any employee,
officer, director, agent or Affiliate of any of them, shall be liable to any Holder in respect of any amount that would have otherwise
been payable in respect of any Old Certificate from the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(g)
Withholding Rights. Each and any of Buyer, the Surviving Corporation or the Exchange Agent, as applicable, shall be entitled
to deduct and withhold from the Merger Consideration, Seller Stock Option Payouts, Seller Warrant Payouts or any other amounts
or property otherwise payable or distributable to any Person pursuant to this Agreement, such amounts or property (or portions
thereof) as Buyer, the Surviving Corporation or the Exchange Agent is required to deduct and withhold with respect to the making
of such payment or distribution under the Internal Revenue Code, and the rules and regulations promulgated thereunder, or any
provision of applicable Tax Law. Any amounts so deducted or withheld and remitted to the appropriate Regulatory Authority by Buyer,
the Surviving Corporation, or the Exchange Agent, as applicable, shall be treated for all purposes of this Agreement as having
been paid to the Person in respect of which such deduction and withholding was made by Buyer, the Surviving Corporation, or the
Exchange Agent, as applicable.
(h)
Lost Old Certificates. If any Old Certificate shall have been lost, stolen, mutilated or destroyed, then upon the making
of an affidavit of that fact by the Person claiming such Old Certificate, as applicable, to be lost, stolen, mutilated or destroyed
and, if required by the Exchange Agent, Buyer, or the Surviving Corporation, the posting by such Person of a bond in such reasonable
and customary amount as the Exchange Agent, Buyer, or the Surviving Corporation may direct, as indemnity against any claim that
may be made against it with respect to such Old Certificate, the Exchange Agent will issue in exchange for such lost, stolen,
mutilated or destroyed Old Certificate the Merger Consideration to which the Holder thereof is entitled pursuant to this Agreement.
(i)
Change in Name on Old Certificate. If any Buyer Certificate is to be issued in a name other than that in which the Old
Certificates surrendered (or canceled) in exchange therefor is or are registered, it shall be a condition of the issuance thereof
that the Old Certificates so surrendered (or canceled) shall be properly endorsed (or accompanied by an appropriate instrument
of transfer) and otherwise in proper form for transfer, and that the Person requesting such exchange shall pay to the Exchange
Agent, Buyer or the Surviving Corporation in advance any transfer or other similar Taxes required by reason of the issuance of
a Buyer Certificate in any name other than that of the registered Holder of the Old Certificates surrendered (or canceled), or
required for any other reason, or shall establish to the satisfaction of the Exchange Agent, Buyer and the Surviving Corporation
that such Tax has been paid or is not payable.
3.2. Dissenting
Shareholders.
(a)
Notwithstanding anything in this Agreement to the contrary, shares of Seller Common Stock that are issued and outstanding immediately
prior to the Effective Time and which are held by any Holder who is entitled to demand and properly demands appraisal of such
shares of Seller Common Stock pursuant to, and who complies in all respects with, the provisions of Sections 10.351 through 10.368
of the TBOC (“Section 10.351 et seq.”) (the “Seller Dissenting Shareholders”), shall not
be converted into or be exchangeable for the right to receive any of the consideration as specified in this Agreement (the “Seller
Dissenting Shares”), but instead such Holder shall be entitled to payment of the fair value of such Seller Dissenting
Shares in accordance with the provisions of Section 10.351 et seq. At the Effective Time, all Seller Dissenting Shares shall no
longer be outstanding, shall automatically be canceled and retired and shall cease to exist, and each Holder of Seller Dissenting
Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of such Seller Dissenting
Shares in accordance with the provisions of Section 10.351 et seq. Notwithstanding the foregoing, if any such Holder shall fail
to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 10.351 et seq., or a court of competent
jurisdiction shall determine that such Holder is not entitled to the relief provided by Section 10.351 et seq., then the right
of such Holder to be paid the fair value of such Holder’s Seller Dissenting Shares under Section 10.351 et seq. shall cease
and such Seller Dissenting Shares shall be deemed to have been converted at the Effective Time into, and shall have become, the
right to receive the Merger Consideration.
(b)
Seller shall give prompt written notice (but in any event within 48 hours) to Buyer of any demands for appraisal of any shares
of Seller Common Stock and any withdrawals of such demands, and Buyer shall have the right to participate in and direct all negotiations
and proceedings with respect to such demands. Seller shall not, except with the prior written consent of Buyer, voluntarily make
any payment with respect to, or settle, or offer or agree to settle, any such demand for payment.
ARTICLE
4
REPRESENTATIONS AND WARRANTIES OF SELLER
Except
as Previously Disclosed, Seller hereby represents and warrants to Buyer as follows:
4.1. Organization,
Standing, and Power.
(a)
Status of Seller. Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State
of Texas, is authorized under the Laws of the State of Texas to engage in its business as currently conducted and otherwise has
the corporate power and authority to own, lease and operate all of its Assets and to conduct its business in the manner in which
its business is now being conducted. Seller is duly qualified or licensed to transact business as a foreign corporation in good
standing in the states of the United States and foreign jurisdictions in which its ownership of Assets or conduct of business
requires such qualification or licensure, except where failure to be so qualified or licensed has not had or would not be reasonably
expected to have, either individually or in the aggregate, a Material Adverse Effect on Seller and Seller Bank, taken as a
whole.
Seller is duly registered with the Federal Reserve as a bank holding company under the BHC Act. Seller is duly registered and
in good standing with the Texas Department of Savings and Mortgage Lending (“TDSML”) as a holding company under
the Texas Savings Bank Act. True, complete and correct copies of the certificate of formation and bylaws of Seller, each as in
effect as of the date of this Agreement, have been delivered or made available to Buyer. The certificate of formation and the
bylaws of Seller comply with applicable Law.
(b)
Status of Seller Bank. Seller Bank is a direct, wholly owned Seller Subsidiary, is duly organized, validly existing and
in good standing under the Laws of the State of Texas, is authorized under the Laws of the State of Texas to engage in its business
as currently conducted and otherwise has the corporate power and authority to own, lease and operate all of its Assets and to
conduct its business in the manner in which its business is now being conducted. Seller Bank is authorized by the TDSML to engage
in the business of banking as a state savings bank. Seller Bank is in good standing in each jurisdiction in which its ownership
of Assets or conduct of business requires such qualification, except where failure to be so qualified has not had or would not
reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Seller and Seller Bank,
taken as a whole. True, complete and correct copies of the articles of incorporation and bylaws of Seller Bank, each as in effect
as of the date of this Agreement, have been delivered or made available to Buyer. The articles of incorporation and bylaws of
Seller Bank comply with applicable Law.
4.2. Authority
of Seller; No Breach by Agreement.
(a)
Authority. Seller has the corporate power and authority necessary to execute, deliver, and, other than with respect to
the Merger, perform this Agreement, and with respect to the Merger, upon the approval of this Agreement and the Merger by the
affirmative vote of at least a majority of the outstanding shares of Seller Common Stock entitled to vote on this Agreement and
the Merger as contemplated by Section 7.1 (the “Seller Shareholder Approval”), to perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated herein, including the Merger, have been duly and validly authorized and
approved by all necessary corporate action in respect thereof on the part of Seller (including approval by and a determination
by all of the members of the board of directors of Seller that this Agreement is advisable and in the best interests of Seller’s
shareholders and directing the submission of this Agreement to a vote at a meeting of shareholders of Seller), subject to the
Seller Shareholder Approval. This Agreement has been duly executed and delivered by Seller. Subject to the Seller Shareholder
Approval, and assuming the due authorization, execution and delivery by Buyer, this Agreement represents a legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, receivership, conservatorship, moratorium,
or similar Laws affecting the enforcement of creditors’ rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may
be brought (the “Bankruptcy and Equity Exceptions”)).
(b)
No Conflicts. Subject to the receipt of the Seller Shareholder Approval, neither the execution and delivery of this Agreement
by Seller nor the consummation by Seller of the transactions contemplated hereby, nor compliance by Seller with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision of Seller’s certificate of formation, bylaws or other
governing instruments, or the articles of incorporation, bylaws, or other governing instruments of Seller Bank or any other Seller
Entity, or any resolution adopted by the board of directors or the shareholders of any Seller Entity, or (ii) subject to receipt
of the Requisite Regulatory Approvals and the consents of counterparties to the Contracts listed in Section 4.2(c) of Seller’s
Disclosure Memorandum (the “Contract Consents”), (x) violate any Law applicable to any Seller Entity or any
of their respective Assets or (y) violate, conflict with, constitute or result in a Default under or the loss of any benefit under,
or result in the creation of any Lien upon any of the respective Assets of any Seller Entity under any of the terms, conditions
or provisions of any Contract or Permit of any Seller Entity or under which any of
their respective Assets may be bound, except
in the case of clause (y) above where such violations, conflicts or Defaults have not had or would not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect on Seller and Seller Bank, taken as a whole.
(c)
Consents. Other than in connection or compliance with the provisions of the Securities Laws (including the filing and declaration
of effectiveness of the Registration Statement), applicable state Laws, the rules of Nasdaq, the TBOC, the ABCA, the Federal Deposit
Insurance Act (the “FDIA”), the BHC Act, the Requisite Regulatory Approvals, and the Contract Consents, no
notice to, filing with, or Consent of, any Regulatory Authority or any third party is necessary for the consummation by Seller
or Seller Bank, as applicable, of the Merger, the Bank Merger, and the other transactions contemplated by this Agreement. As of
the date hereof, Seller has no Knowledge of any reason why the Requisite Regulatory Approvals will not be received in order to
permit consummation of the Merger on a timely basis.
(d)
Seller Debt. Seller has no debt that is secured by Seller Bank capital stock.
4.3. Capitalization
of Seller.
(a)
Ownership. The authorized capital stock of Seller consists of 50,000,000 shares of Seller Common Stock, no par value, and
5,000,000 shares of Seller Preferred Stock, $1.00 par value per share. As of the close of business on November 16, 2021, (i) 17,261,959
shares of Seller Common Stock (excluding treasury shares) were issued and outstanding and (ii) 1,306,268 shares of Seller Common
Stock were held by Seller in its treasury, (iii) 780,230 shares of Seller Common Stock were reserved for issuance upon the exercise
of outstanding Seller Stock Options, (iv) 15,312 shares of Seller Common Stock were reserved for issuance upon the exercise of
outstanding Seller Warrants, (v) 323,129 shares of Seller Common Stock were reserved for issuance upon the vesting of Seller Restricted
Stock Units, and (vi) no shares of Seller Preferred Stock were issued and outstanding. As of the Effective Time, no more than
(A) 18,057,501 shares of Seller Common Stock will be issued and outstanding (excluding treasury shares), (B) 1,306,268 shares
of Seller Common Stock will be held by Seller in its treasury, and (C) no shares of Seller Preferred Stock will be issued and
outstanding. As of immediately prior to the Effective Time, there will be no more than (I) 780,230 Seller Stock Options Outstanding,
(II) 15,312 Seller Warrants Outstanding, and (III) 435,676 Seller Restricted Stock Units. Additionally, as of immediately prior
to the Effective Time, there will be, in the aggregate, no more than 18,493,177 shares of Seller Common Stock that are either
issued and outstanding or reserved for issuance upon the exercise or vesting of Seller Stock Options, Seller Warrants, or Seller
Restricted Stock Units.
(b)
Other Rights or Obligations. All of the issued and outstanding shares of capital stock (and other equity interest, including
Seller Stock Options, Seller Warrants and Seller Restricted Stock Units) of Seller are duly authorized and validly issued and
outstanding, and are fully paid and nonassessable and free of preemptive rights, with no personal liability attaching to the ownership
thereof. None of the outstanding shares of capital stock (or other equity interest, including Seller Stock Options, Seller Warrants
and Seller Restricted Stock Units) of Seller has been issued in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities of the current or past shareholders of Seller.
(c)
Outstanding Equity Rights. Other than the Seller Stock Options, Seller Warrants, and Seller Restricted Stock Units outstanding
as of the date of this Agreement and set forth in Sections 4.3(a)(iii-v), there are no (i) existing Equity Rights with respect
to the securities of Seller or any Seller Subsidiary, (ii) Contracts under which any Seller Entity is or may become obligated
to sell, issue, deliver, transfer or otherwise dispose of or redeem, purchase or otherwise acquire any securities of Seller or
any Seller Subsidiary, (iii) Contracts under which Seller is or may become obligated to register shares of Seller’s capital
stock or other securities under the Securities Act, (iv) shareholder agreements, voting trusts or other agreements, arrangements
or understandings to which Seller or any Seller Subsidiary is a party or of which Seller has Knowledge, that may reasonably be
expected to affect the exercise of voting or any other rights with respect to the capital stock of Seller or any
Seller Subsidiary
or (v) outstanding bonds, debentures, notes or other indebtedness having the right to vote (or which are convertible into, or
exchangeable for, securities having the right to vote) on any matters on which the shareholders of Seller or any Seller Subsidiary
may vote. No Seller Subsidiary owns any capital stock of Seller.
4.4. Capitalization
of Seller Bank.
(a)
Capitalization of Seller Bank. The authorized capital stock of Seller Bank consists of (i) 10,000,000 shares of Seller
Bank Common Stock, $4.00 par value per share. 60,000 shares of Seller Bank Common Stock are outstanding as of the date of this
Agreement. All of the outstanding shares of Seller Bank Capital Stock (and other equity interests in Seller Bank) are directly
and beneficially owned and held by Seller free and clear of any Lien.
(b)
Other Rights or Obligations. All of the issued and outstanding shares of Seller Bank Capital Stock (and other equity interests
in Seller Bank) are duly and validly issued and outstanding and are fully paid and nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. None of the outstanding shares of Seller Bank Capital Stock (or
other equity interests in Seller Bank) has been issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities of the current or past shareholders of Seller Bank.
(c)
Seller Bank. Seller Bank does not have any Subsidiaries nor own any equity interests in any other Person.
4.5. Seller
Subsidiaries.
(a)
Reserved.
(b)
Reserved.
(c)
Seller does not have any direct or indirect Subsidiaries nor own any equity interests in any other Person other than Seller Bank.
There are no (i) existing Equity Rights with respect to the securities of any Seller Subsidiary, (ii) Contracts under which any
Seller Subsidiary are or may become obligated to sell, issue, deliver, transfer or otherwise dispose of or redeem, purchase or
otherwise acquire any securities of any Seller Subsidiary, (iii) Contracts under which any Seller Subsidiary is or may become
obligated to register shares of any Seller Subsidiary’s capital stock or other securities under the Securities Act, (iv)
shareholder agreements, voting trusts or other agreements, arrangements or understandings to which any Seller Subsidiary is a
party or of which Seller has Knowledge, that may reasonably be expected to affect the exercise of voting or any other rights with
respect to the capital stock of any Seller Subsidiary, or (v) outstanding bonds, debentures, notes or other indebtedness having
the right to vote (or which are convertible into, or exchangeable for, securities having the right to vote) on any matters on
which the shareholders of any Seller Subsidiary may vote.
4.6. Regulatory
Reports.
(a)
Regulatory Filings. Since December 31, 2017, Seller and each Seller Subsidiary has filed on a timely basis, all forms,
filings, registrations, submissions, statements, certifications, returns, information, data, reports and documents required to
be filed or furnished by it with the TDSML, the Federal Deposit Insurance Corporation (“FDIC”), the Federal
Reserve, and any other applicable Regulatory Authority, as the case may be. All such reports, certifications, forms, returns,
filings, information, data, registrations, submissions, statements and documents required to be filed under any applicable Law,
including any and all federal and state banking Laws, were complete and accurate in all material respects and in compliance in
all material respects with the requirements of any applicable Law. Subject to Section 10.15, there (i) is no unresolved violation,
criticism, or exception by any Regulatory Authority with respect to any form, filing, registration, submission,
statement, certification,
return, information, data, report or document relating to any examinations, inspections or investigations of any Seller Entity
and (ii) except for routine communications between any Seller Entity and any Regulatory Authority in connection with normal examinations,
has been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Authority with respect to the business,
operations, policies or procedures of any Seller Entity. Subject to Section 10.15 and except for normal examinations conducted
by a Regulatory Authority in the Ordinary Course, no Regulatory Authority has initiated or has pending any proceeding or, to the
Knowledge of Seller, investigation into the business or operations of the Seller or the Seller Subsidiaries since December 31,
2017, except where such proceedings or investigations would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on Seller and the Seller Subsidiaries, taken as a whole. Seller is in compliance in all material
respects with the applicable listing and corporate governance rules and regulations of Nasdaq.
(b)
Seller’s SEC Reports. An accurate and complete copy of each final registration statement, prospectus, report, schedule
and definitive proxy statement filed with or furnished to the SEC by Seller or any Seller Subsidiary pursuant to the Securities
Act or the Exchange Act, as the case may be, since April 26, 2018 (the “Seller SEC Reports”) is publicly available.
No such Seller SEC Report, at the time filed, furnished or communicated (and, in the case of registration statements, prospectuses
and proxy statements, on the dates of effectiveness, dates of first sale of securities and the dates of the relevant meetings,
respectively), contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, except
that information filed or furnished as of a later date (but before the date of this Agreement) shall be deemed to modify information
as of an earlier date. As of their respective dates, all Seller SEC Reports filed or furnished under the Securities Act and the
Exchange Act complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto.
As of the date of this Agreement, no executive officer of Seller has failed to make the certifications required of him or her
under Section 302 or 906 of the Sarbanes-Oxley Act. As of the date of this Agreement, there are no outstanding comments from or
material unresolved issues raised by the SEC with respect to any of the Seller SEC Reports.
4.7.
Financial Matters.
(a)
Financial Statements. Seller has made available to Buyer the Seller Financial Statements. The Seller Financial Statements
included or incorporated by reference in the Seller SEC Reports with respect to periods ending prior to the date of this Agreement
(i) have been prepared from, and are in accordance with, the Books and Records of the Seller Entities, (ii) have been prepared
in accordance with GAAP, regulatory accounting principles and applicable accounting requirements and, if applicable, with the
published rules and regulations of the SEC, in each case, consistently applied, except as may be otherwise indicated in the notes
thereto and except with respect to the unaudited financial statements for the omission of footnotes and (iii) fairly present in
all material respects the consolidated financial condition of the Seller Entities as of the respective dates set forth therein
and the results of operations, shareholders’ equity and cash flows of the Seller Entities for the respective periods set
forth therein. The consolidated Seller Financial Statements to be prepared after the date of this Agreement and prior to the Closing
(A) will have been prepared in accordance with GAAP, regulatory accounting principles and applicable accounting requirements and,
if applicable, with the published rules and regulations of the SEC, in each case, consistently applied except as may be otherwise
indicated in the notes thereto and except with respect to unaudited financial statements for the omission of footnotes and year-end
adjustments and (B) will fairly present in all material respects the consolidated financial condition of Seller as of the respective
dates set forth therein and the results of operations, shareholders’ equity (except with respect to unaudited financial
statements) and cash flows (except with respect to unaudited financial statements) of Seller for the respective periods set forth
therein, subject in the case of unaudited financial statements to the omission of footnotes and year-end adjustments.
(b)
Call Reports. The financial statements contained in the Call Reports of Seller Bank for all of the periods ending on or
after December 31, 2017 (i) have been prepared in accordance with GAAP (except to the extent applicable Law requires otherwise)
and regulatory accounting principles consistently applied, except as may be otherwise indicated in the notes thereto and except
for the omission of footnotes and (ii) fairly present in all material respects the financial condition of Seller Bank as of the
respective dates set forth therein and the results of operations and shareholders’ equity for the respective periods set
forth therein, subject to year-end adjustments. The financial statements contained in the Call Reports of Seller Bank to be prepared
after the date of this Agreement and prior to the Closing (A) will have been prepared in accordance with GAAP (except to the extent
applicable Law requires otherwise) and regulatory accounting principles consistently applied, except as may be otherwise indicated
in the notes thereto and except for the omission of footnotes and (B) will fairly present in all material respects the financial
condition of Seller Bank as of the respective dates set forth therein and the results of operations and shareholders’ equity
of Seller Bank for the respective periods set forth therein, subject to year-end adjustments.
(c)
Systems and Processes. Each of Seller and Seller Bank has in place sufficient systems and processes that are customary
for a financial institution of the size of Seller and Seller Bank and that are designed to (i) provide reasonable assurances regarding
the reliability of financial reporting and the preparation of the Seller Financial Statements and Seller Bank’s financial
statements, including the Call Reports, (ii) in a timely manner accumulate and communicate to Seller and Seller Bank’s principal
executive officer and principal financial officer the type of information that would be required to be disclosed in Seller Financial
Statements and Seller Bank’s financial statements, including the Call Reports, or any forms, filings, registrations, submissions,
statements, certifications, returns, information, data, reports or documents required to be filed or provided to any Regulatory
Authority, (iii) ensure access to Seller and Seller Bank’s Assets is permitted only in accordance with management’s
authorization, and (iv) ensure the reporting of such Assets is compared with existing Assets at regular intervals. Since December
31, 2017, neither Seller nor Seller Bank nor, to Seller’s Knowledge, any Representative of any Seller Entity has received
or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or oral, regarding the
adequacy of such systems and processes or the accuracy or integrity of Seller Financial Statements, Seller Bank’s financial
statements, including the Call Reports, or the accounting or auditing practices, procedures, methodologies or methods (including
with respect to loan loss reserves, write-downs, charge-offs and accruals) of any Seller Entity or their respective internal accounting
controls, including any complaint, allegation, assertion or claim that Seller or any Seller Subsidiary has engaged in questionable
accounting or auditing practices. No attorney representing any Seller Entity, whether or not employed by any Seller Entity, has
reported evidence of a material violation of Securities Laws, breach of fiduciary duty or similar violation by any Seller Entity
or any of its officers, directors or employees to the board of directors of any Seller Entity or any committee thereof or to any
director or officer of any Seller Entity. To Seller’s Knowledge, there has been no instance of fraud by any Seller Entity,
whether or not material, that occurred during any period covered by Seller Financial Statements.
(d)
Records. The records, systems, controls, data and information of the Seller Entities are recorded, stored, maintained and
operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under
the exclusive ownership and direct control of a Seller Entity or accountants (including all means of access thereto and therefrom),
except where such non-exclusive ownership and non-direct control has not had or would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on Seller and Seller Bank, taken as a whole. Seller and Seller Bank
(i) have implemented and maintain disclosure controls and procedures (as defined in Rule 13a-15 or 15d-15, as applicable, of the
Exchange Act) to ensure the reliability of the Seller Financial Statements and to ensure that information relating to Seller,
including Seller Subsidiaries, is made known to the chief executive officer, chief financial officer or other members of executive
management of Seller by others within those entities as appropriate (A) to allow timely decisions regarding required disclosures
and to make the certifications required by the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”), (B) which allow in all material
respects for maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the Assets of Seller and Seller Subsidiaries, (C) that provide reasonable
assurance in all material respects that transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that receipts and expenditures of Seller are being made only in accordance with authorizations of management
and directors of Seller and (D) that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of Seller’s Assets that could have a material adverse effect on its financial statements and (ii) have
disclosed, based on their most recent evaluation prior to the date of this Agreement, to their outside auditors and the audit
committee of their respective boards of directors (Y) any significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) which could adversely
affect their ability to record, process, summarize or report financial data and have disclosed to their auditors any material
weaknesses in internal control over financial reporting and (Z) any fraud, whether or not material, that involves management or
other employees who have a significant role in their internal control over financial reporting. To the Knowledge of Seller, there
is no reason to believe that Seller’s outside auditors and its chief executive officer and chief financial officer will
not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section
404 of the Sarbanes-Oxley Act, without qualification, when next due, if required.
(e)
Auditor Independence. The independent registered public accounting firm engaged to express its opinion with respect to
the Seller Financial Statements included in the Seller’s SEC Reports is, and has been throughout the periods covered thereby,
“independent” within the meaning of Rule 2-01 of Regulation S-X. As of the date hereof, the outside auditor for Seller
and Seller Bank has not resigned or been dismissed as a result of or in connection with any disagreements with Seller or Seller
Bank on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
4.8.
Books and Records.
The
Books and Records of Seller and Seller Bank have been and are being maintained in the Ordinary Course in accordance and compliance
in all material respects with all applicable accounting requirements and Laws and are complete and accurate in all material respects
to reflect corporate action by Seller and Seller Bank.
4.9. Absence
of Undisclosed Liabilities.
No
Seller Entity has incurred any Liability, except for Liabilities (a) incurred in the Ordinary Course since December 31, 2020,
(b) incurred in connection with this Agreement and the transactions contemplated hereby, or (c) that are accrued or reserved against
in the consolidated balance sheet of Seller as of December 31, 2020 included in the Seller Financial Statements at and for the
period ending December 31, 2020.
4.10. Absence
of Certain Changes or Events.
(a)
Since December 31, 2020, there has not been a Material Adverse Effect on Seller.
(b)
Since December 31, 2020, (i) the Seller Entities have carried on their respective businesses only in the Ordinary Course, (ii)
there has not been any material damage, destruction or other casualty loss with respect to any material Asset owned, leased or
otherwise used by any Seller Entity whether or not covered by insurance and (iii) none of the Seller Entities have taken any action
that would be prohibited by Section 6.2 if taken after the date hereof.
4.11. Tax.
(a)
All Seller Entities have timely filed with the appropriate Taxing authorities all material Tax Returns in all jurisdictions in
which such Tax Returns are required to be filed, and such Tax Returns are correct and complete in all material respects. None
of the Seller Entities is the beneficiary of any extension of time within which to file any Tax Return (other than any extensions
to file Tax Returns obtained in the Ordinary Course and automatically granted). All material Taxes of the Seller Entities (whether
or not shown on any Tax Return) that are due have been fully and timely paid. There are no Liens for Taxes (other than a Lien
for Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings) on any of the Assets of
any of the Seller Entities. No claim has been made in the last six years in writing by an authority in a jurisdiction where any
Seller Entity does not file a Tax Return that such Seller Entity is or may be subject to Taxes by that jurisdiction.
(b)
None of the Seller Entities has received any written notice of assessment or proposed assessment in connection with any amount
of Taxes, and there are no threatened in writing or pending disputes, claims, audits or examinations regarding any Taxes of any
Seller Entity or the Assets of any Seller Entity. None of the Seller Entities has waived any statute of limitations in respect
of any Taxes.
(c)
Each Seller Entity has complied in all material respects with all applicable Laws relating to the withholding of Taxes and the
payment thereof to appropriate authorities, including Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee or independent contractor, and Taxes required to be withheld and paid pursuant to Sections 1441
and 1442 of the Internal Revenue Code or similar provisions under foreign Law.
(d)
The unpaid Taxes of each Seller Entity (i) did not, as of the most recent fiscal month end, materially exceed the reserve for
Tax Liability (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income)
set forth on the face of the most recent balance sheet (rather than in any notes thereto) for such Seller Entity and (ii) do not
exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with past custom and practice of
the Seller Entities in filing their Tax Returns.
(e)
None of the Seller Entities is a party to any Tax indemnity, allocation or sharing agreement (other than any agreement solely
between the Seller Entities and other than any customary Tax indemnifications contained in credit or other commercial agreements
the primary purpose of which agreements does not relate to Taxes) and none of the Seller Entities has been a member of an affiliated
group filing a consolidated federal income Tax Return (other than a group the common parent of which was Seller) or has any Tax
Liability of any Person under Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign Law (other
than the other members of the consolidated group the common parent of which is or was Seller), or as a transferee or successor.
(f)
During the two-year period ending on the date hereof, none of the Seller Entities was a distributing corporation or a controlled
corporation in a transaction intended to be governed by Section 355 of the Internal Revenue Code. During the five-year period
ending on the date hereof, none of the Seller Entities was a United States real property holding corporation within the meaning
of Section 897(c)(2) of the Internal Revenue Code.
(g)
Each Seller Benefit Plan, employment agreement, or other compensation arrangement of a Seller Entity that is a “nonqualified
deferred compensation plan” within the meaning of Section 409A of the Internal Revenue Code has a plan document that satisfies
the requirements of Section 409A of the Internal Revenue Code and has been operated in compliance with the terms of such plan
document and the requirements of Section 409A of the Internal Revenue Code, and the regulations thereunder, in each case such
that no Tax is or has been due or payable under Section 409A of the Internal Revenue Code. No Seller Entity has any obligation
to gross-up or otherwise reimburse any person for any Tax incurred by such person pursuant to
Section 409A, Section 280G or Section
4999 of the Internal Revenue Code or otherwise. All Seller Stock Options and Seller Warrants were granted at no less than “fair
market value” for purposes of Section 409A of the Internal Revenue Code, and each Seller Stock Option and Seller Warrant
is exempt from Section 409A of the Internal Revenue Code.
(h)
None of the Seller Entities will be required to include after the Closing any material adjustment in taxable income pursuant to
Section 481 of the Internal Revenue Code or any comparable provision under state or foreign Tax Laws as a result of transactions
or events occurring prior to the Closing. None of the Seller Entities have participated in any “reportable transaction”
within the meaning of Treasury Regulation Section 1.6011-4 or any “tax shelter” within the meaning of the Internal
Revenue Code Section 6662.
(i)
All Seller Entities have (i) to the extent deferred, properly complied in all material respects with all applicable Laws in order
to defer the amount of the employer’s share of any “applicable employment taxes” under Section 2302 of the CARES
Act, (ii) to the extent applicable, eligible, and claimed, or intended to be claimed, properly complied in all material respects
with all Laws and duly accounted for any available Tax credits under Sections 7001 through 7004 of the Families First Coronavirus
Response Act and Section 2301 of the CARES Act, (iii) not deferred any payroll Tax obligations (including those imposed by Sections
3101(a) and 3201 of the Internal Revenue Code) (for example, by a failure to timely withhold, deposit or remit such amounts in
accordance with the applicable provisions of the Internal Revenue Code and the Treasury Regulations promulgated thereunder) pursuant
to or in connection with any U.S. presidential memorandum or executive order, and (iv) not sought a PPP Loan.
4.12.
Assets.
(a)
Each Seller Entity has good and marketable title to those Assets reflected in the most recent Seller Financial Statements as being
owned by such Seller Entity or acquired after the date thereof (except Assets sold or otherwise disposed of since the date thereof
in the Ordinary Course), free and clear of all Liens, except (a) statutory Liens securing payments not yet due, (b) Liens for
real property Taxes not yet due and payable, (c) easements, rights of way, and other similar encumbrances that do not materially
affect the use of the Assets subject thereto or affected thereby or otherwise materially impair business operations and use of
such Assets and (d) such imperfections or irregularities of title or Liens as do not materially affect the use of the Assets subject
thereto or affected thereby or otherwise materially impair business operations and use of such Assets (collectively, “Permitted
Liens”). Seller is the fee simple owner of all owned real property and the lessee of all leasehold estates reflected
in the most recent Seller Financial Statements, free and clear of all Liens of any nature whatsoever, except for Permitted Liens,
and is in possession of the properties purported to be owned or leased thereunder, as applicable, and each such lease is valid
without Default thereunder by the lessee or, to the Knowledge of Seller, the lessor. There are no pending or, to the Knowledge
of Seller, threatened condemnation or eminent domain proceedings against any real property that is owned or leased by Seller.
The Seller Entities own or lease all properties as are necessary to their operations as now conducted and no Person has any option
or right to acquire or purchase any ownership interest in the owned real property or any portion thereof.
(b)
Section 4.12(b) of Seller’s Disclosure Memorandum sets forth a complete and correct list of all street addresses and fee
owners of all real property owned, leased or licensed by any Seller Entity or otherwise occupied by a Seller Entity or used or
held for use by any Seller Entity (collectively, the “Real Property”). Other than as set forth on Section 4.12(b)
of Seller’s Disclosure Memorandum, there are no Persons in possession of any portion of any of the Real Property owned or
leased by any Seller Entity other than such Seller Entity, and no Person other than a Seller Entity has the right to use or occupy
for any purpose any portion of any of the Real Property owned, leased or licensed by a Seller Entity. Seller or a Seller Subsidiary
has good and marketable fee title to all Real Property owned by it free and clear of all Liens, except Permitted Liens. There
are no outstanding options, rights of first offer or refusal or other pre-emptive rights or purchase rights with respect to any
such owned Real Property.
(c)
All leases of Real Property under which any Seller Entity, as lessee, leases Real Property, are valid, binding and enforceable
in accordance with their respective terms and Seller or such Seller Subsidiary has good and marketable leasehold interests to
all Real Property leased by them. There is not under any such lease any material existing Default by any Seller Entity or, to
Seller’s Knowledge, any other party thereto, or any event which with notice or lapse of time would constitute such a material
Default and all rent and other sums and charges due and payable under such lease have been paid.
(d)
The Assets reflected in the most recent Seller Financial Statements which are owned or leased by the Seller Entities, and in combination
with the Real Property, the Intellectual Property of any Seller Entity, and contractual benefits and burdens of the Seller Entities,
constitute, as of the Closing Date, all of the Assets, rights and interests necessary to enable the Seller Entities to operate
consolidated businesses in the Ordinary Course and as the same is expected to be conducted on the Closing Date.
4.13. Intellectual
Property; Privacy.
(a)
Each Seller Entity owns or has a valid license to use (in each case, free and clear of any Liens other than any Permitted Liens)
all of the Intellectual Property necessary to carry on the business of such Seller Entity as it is currently conducted. Each Seller
Entity is the owner of or has a license, with the right to sublicense, to any Intellectual Property sold or licensed to a third
party by such Seller Entity in connection with its business operations, and such Seller Entity has the right to convey by sale
or license any Intellectual Property so conveyed. No Seller Entity is in Default under any of its Intellectual Property licenses.
No proceedings have been instituted, or are pending or to the Knowledge of Seller threatened, which challenge the rights of any
Seller Entity with respect to Intellectual Property used, sold or licensed by such Seller Entity in the course of its business,
nor has any Person claimed or alleged any rights to such Intellectual Property. The conduct of the business of each Seller Entity
and the use of any Intellectual Property by each Seller Entity does not infringe, misappropriate or otherwise violate the Intellectual
Property rights of any other Person. No Person has asserted to Seller in writing that any Seller Entity has infringed, misappropriated
or otherwise violated the Intellectual Property rights of such Person. The validity, continuation and effectiveness of all licenses
and other agreements relating to Intellectual Property used by any Seller Entity in the course of its business and the current
terms thereof will not be affected by the transactions contemplated by this Agreement, the use of the “Spirit of Texas Bancshares,”
“Spirit of Texas Bancshares, Inc.,” “Spirit of Texas Bank,” and “Spirit of Texas Bank SSB”
trademarks will be transferred to Buyer or Buyer Bank in connection with the transactions contemplated by this Agreement and after
the Effective Time, no Person besides Buyer shall have right and title to the “Spirit of Texas Bancshares,” “Spirit
of Texas Bancshares, Inc.,” “Spirit of Texas Bank,” and “Spirit of Texas Bank SSB” trademarks and
trade names. All of the Seller Entities’ right to the use of and title to the names “Spirit of Texas Bancshares,”
“Spirit of Texas Bancshares, Inc.,” “Spirit of Texas Bank,” and “Spirit of Texas Bank SSB”
will be transferred to Buyer in connection with the completion of the transactions contemplated by this Agreement.
(b)
(i) The computer, information technology and data processing systems, facilities and services used by the Seller Entities, including
all software, hardware, networks, communications facilities, platforms and related systems and services (collectively, the “Systems”),
are reasonably sufficient for the conduct of the respective businesses of the Seller Entities as currently conducted and (ii)
the Systems are in good working condition to effectively perform all computing, information technology and data processing operations
necessary for the operation of the respective businesses of the Seller Entities as currently conducted. To Seller’s Knowledge,
no third party or Representative has gained unauthorized access to any Systems owned or controlled by any Seller Entity, and each
Seller Entity has taken commercially reasonable steps and implemented commercially reasonable safeguards to ensure that the Systems
are secure from unauthorized access and free from any disabling codes or instructions, spyware, Trojan horses, worms, viruses
or other software routines that permit or cause unauthorized access to, or disruption, impairment, disablement, or destruction
of, software, data or other materials. Each Seller Entity has implemented backup and disaster recovery policies, procedures and
systems consistent with generally
accepted industry standards and sufficient to reasonably maintain the operation of the respective
businesses of the Seller Entities in all material respects. Each Seller Entity has implemented and maintained commercially reasonable
measures and procedures designed to reasonably mitigate the risks of cybersecurity breaches and attacks.
(c)
Each Seller Entity has (i) complied in all material respects with all applicable Laws which govern the receipt, collection, compilation,
use, storage, processing, sharing, safeguarding, security, disposal, destruction, disclosure, transmission or transfer of the
personal data or information of customers or other individuals (“Personally Identifiable Information”) and
similar Laws governing data privacy, and with all of its published privacy and data security policies and internal privacy and
data security policies and guidelines, including with respect to the receipt, collection, compilation, use, storage, processing,
sharing, safeguarding, security, disposal, destruction, disclosure, transmission or transfer of Personally Identifiable Information
and (ii) taken commercially reasonable measures to ensure that all Personally Identifiable Information in its possession or control
is protected against loss, damage, and unauthorized access, use, modification, or other misuse. To Seller’s Knowledge, there
has been no loss, damage, or unauthorized access, use, modification, or other misuse of any such Personally Identifiable Information
by any Seller Entity or any other Person.
4.14.
Environmental Matters.
(a)
Each Seller Entity, its Participation Facilities, and its Operating Properties are, and have been since December 31, 2017, in
compliance, in all material respects, with all Environmental Laws.
(b)
There is no Litigation pending or, to the Knowledge of Seller, threatened before Regulatory Authority or other forum in which
any Seller Entity or any of its Operating Properties or Participation Facilities (or Seller in respect of such Operating Property
or Participation Facility) has been or, with respect to threatened Litigation, may be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with or Liability under any Environmental Law or (ii) relating to the release, discharge, spillage,
or disposal into the environment of any Hazardous Material, whether or not occurring at, on, under, adjacent to, or affecting
(or potentially affecting) a site currently or formerly owned, leased, or operated by any Seller Entity or any of its Operating
Properties or Participation Facilities, nor is there any reasonable basis for any Litigation of a type described in this sentence.
No Seller Entity is subject to any Order imposing any Liability or obligation with respect to any Environmental Law that has had
or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Seller and the
Seller Entities, taken as a whole, nor is any such order threatened.
4.15. Compliance
with Laws.
(a)
Each Seller Entity has, and since December 31, 2017 has had, in effect all Permits necessary for it to lawfully own, lease, or
operate its material Assets and to carry on its business as now or then conducted (and have paid all fees and assessments due
and payable in connection therewith in all material respects). There has occurred no material Default under any such Permit and
to the Knowledge of Seller no suspension or cancellation of any such material Permit is threatened. None of the Seller Entities:
(i)
is in Default under any of the provisions of its certificate of formation, articles of incorporation, or bylaws (or other governing
instruments);
(ii)
is in material Default under any Laws, Orders, or material Permits applicable to its business or employees conducting its business;
or
(iii)
subject to Section 10.15, has since December 31, 2017 received any written notification or communication from any agency or department
of federal, state, or local government or any Regulatory Authority or the staff thereof asserting that any Seller Entity is not
in compliance with any Laws, Orders, or Permits or engaging in an unsafe or unsound activity or in troubled condition.
(b)
Each Seller Entity is in compliance in all material respects with all applicable Laws, regulatory capital requirements, Consents,
Permits, Orders, or conditions imposed in writing by a Regulatory Authority, to which they or their Assets may be subject.
(c)
Each director, officer, shareholder, manager, and employee of the Seller Entities that has been engaged at any time in the development,
use or operation of the Seller Entities and their respective Assets, and each Independent Contractor, is and has been in compliance
in all material respects with all applicable Laws relating to the development, use or operation of the Seller Entities and their
respective Assets. No proceeding or notice has been filed, given, commenced or, to the Knowledge of Seller, threatened against
any of the Seller Entities or any of their respective directors, officers, members, Affiliates, managers, employees or Independent
Contractors alleging any failure to so comply with all applicable Laws.
(d)
Seller Bank has, in all material respects, (i) properly certified all foreign deposit accounts and has made all necessary Tax
withholdings on all of its deposit accounts, (ii) timely and properly filed and maintained all requisite Currency Transaction
Reports and other related forms, including any requisite Custom Reports required by any agency of the U.S. Department of the Treasury,
including the United States Internal Revenue Service (“IRS”), and (iii) subject to Section 10.15, timely filed
all Suspicious Activity Reports with the Financial Crimes Enforcement Network (bureau of the U.S. Department of the Treasury)
required to be filed by it pursuant to all applicable Laws.
(e)
Subject to Section 10.15, Seller and Seller Bank are “well-capitalized” and “well managed” (as those terms
are defined in applicable Laws).
(f)
Since December 31, 2017, each Seller Entity has properly administered, in all material respects, all accounts for which it acts
as a fiduciary, including accounts for which any Seller Entity serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment adviser, in accordance with the terms of the applicable governing documents and applicable
Laws. Since December 31, 2017, no Seller Entity, or, to Seller’s Knowledge, any director, officer, or employee of any Seller
Entity, has committed any material breach of trust or fiduciary duty with respect to any such fiduciary account, and the accountings
for each such fiduciary account are true, complete and correct and accurately reflect the assets of such fiduciary account.
4.16. Foreign
Corrupt Practices.
No
Seller Entity, or, to the Knowledge of Seller, any director, officer, employee, agent or other Person acting on behalf of a Seller
Entity has, directly or indirectly, (i) used any funds of any Seller Entity for unlawful contributions, unlawful gifts, unlawful
entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic
governmental officials or employees or to foreign or domestic political parties or campaigns from funds of any Seller Entity,
(iii) violated any provision that would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
similar law, (iv) established or maintained any unlawful fund of monies or other Assets of any Seller Entity, (v) made any fraudulent
entry on the Books and Records of any Seller Entity, (vi) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful
influence payment, unlawful kickback or other unlawful payment to any Person, private or public, regardless of form, whether in
money, property or services, to obtain favorable treatment in securing business, to obtain special concessions for any Seller
Entity, to pay for favorable treatment for business secured or to pay for special concessions already obtained for any Seller
Entity, or is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United
States Treasury Department, or (vii) violated or is in violation of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, the Bank Secrecy Act, the USA PATRIOT ACT of 2001, the money laundering Laws of any jurisdiction, and any related
or similar rules, regulations or guidelines, issued, administered or enforced by any Regulatory Authority (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any Regulatory Authority or any arbitrator
involving
any Seller Entity with respect to the Money Laundering Laws is pending or, to the Knowledge of Seller, threatened. Each Seller
Entity has been conducting operations at all times in compliance with applicable financial recordkeeping and reporting requirements
of all Money Laundering Laws administered and each Seller Entity has established and maintained a system of internal controls
designed to ensure compliance by the Seller Entities with applicable financial recordkeeping and reporting requirements of the
Money Laundering Laws.
4.17. Community
Reinvestment Act Performance.
Seller
Bank is an “insured depository institution” as defined in the FDIA and applicable regulations thereunder and has received
a Community Reinvestment Act of 1977 rating of “satisfactory” or better in its most recently completed performance
evaluation, and Seller has no Knowledge of the existence of any fact or circumstance or set of facts or circumstances which could
reasonably be expected to result in Seller Bank having its current rating lowered such that it is no longer “satisfactory”
or better.
4.18.
Labor Relations.
(a)
No Seller Entity is the subject of any pending or, the Knowledge of Seller, threatened Litigation asserting that it or any other
Seller Entity has committed an unfair labor practice (within the meaning of the National Labor Relations Act or comparable state
Law) or other violation of state or federal labor Law or seeking to compel it or any other Seller Entity to bargain with any labor
organization or other employee representative as to wages or conditions of employment. No Seller Entity, predecessor, or Affiliate
of a Seller Entity is or has ever been a party to any collective bargaining agreement or subject to any bargaining order, injunction
or other Order relating to any Seller Entity’s relationship or dealings with its employees, any labor organization or any
other employee representative, and no Seller Entity is currently negotiating any collective bargaining agreement. There is no
strike, slowdown, lockout or other job action or labor dispute involving any Seller Entity pending or, to the Knowledge of Seller,
threatened and there have been no such actions or disputes since December 31, 2017. To the Knowledge of Seller, since December
31, 2017, there has not been any attempt by any Seller Entity employees or any labor organization or other employee representative
to organize or certify a collective bargaining unit or to engage in any other union organization activity with respect to the
workforce of any Seller Entity. The employment of each employee of each Seller Entity is terminable at will by the relevant Seller
Entity without any penalty, liability or severance obligation incurred by any Seller Entity.
(b)
Section 4.18(b) of Seller’s Disclosure Memorandum separately sets forth all of Seller’s employees, including for each
such employee: name, job title, hire date, full- or part-time status, status as a regular, temporary or contract employee, exemption
status, work location (identified by street address), current compensation rate, all fringe benefits (other than employee benefits
applicable to all employees, which benefits are set forth on Section 4.19(a) of Seller’s Disclosure Memorandum), bonuses,
incentives, or commissions paid the past three years, and visa and permanent resident card or immigration application status.
To Seller’s Knowledge, no employee of any Seller Entity is a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality or non-competition agreement, that in any way adversely affects or restricts the performance of
such employee’s duties on behalf of any Seller Entity. Each current and former employee of the Seller Entities who has contributed
to the creation or development of any Intellectual Property owned by any Seller Entity has executed a nondisclosure and assignment-of-rights
agreement for the benefit of the Seller Entities vesting all rights in work product created by the employee during the employee’s
employment or affiliation with the Seller Entities. No Key Employee of any Seller Entity has provided written notice to a Seller
Entity of his or her intent to terminate his or her employment with the applicable Seller Entity as of the date hereof, and, as
of the date hereof, to Seller’s Knowledge, no Key Employee intends to terminate his or her employment with Seller before
Closing. To Seller’s Knowledge, the Seller Entities have properly classified all employees for purposes of eligibility for
overtime pursuant to the Fair Labor Standards Act and any other applicable Law.
(c)
Section 4.18(c) of Seller’s Disclosure Memorandum contains a complete and accurate listing of the name (if an entity, including
the name of the individuals employed by or providing service on behalf of such entity) and contact information of each individual
who has provided personal services to any Seller Entity as an independent contractor, consultant, freelancer or other similar
service provider (collectively, “Independent Contractors”) during the prior two years and which have been paid
over $30,000 in any 12-month period. A copy of each Contract relating to the services provided by any such Independent Contractor
to a Seller Entity has been made available to Buyer prior to the date hereof. Each Independent Contractor ever retained by the
Seller Entities who has contributed to the creation or development of any Intellectual Property owned by any Seller Entity has
executed a nondisclosure and assignment-of-rights agreement for the benefit of the Seller Entities and the Seller Entities are
the owner of all rights in and to all Intellectual Property created by each Independent Contractor in performing services for
the Seller Entities vesting all rights in work product created in the Seller Entities. The Seller Entities have no obligation
or liability with respect to any taxes (or the withholding thereof) in connection with any Independent Contractor. The Seller
Entities have properly classified, pursuant to the Internal Revenue Code, and any other applicable Law, and under Seller Benefit
Plans, all Independent Contractors used by the Seller Entities, or other individuals who provided services as non-employees to
any Seller Entity, at any point. The engagement of each Independent Contractor of each Seller Entity is terminable at will by
the relevant Seller Entity without any penalty, liability or severance obligation incurred by any Seller Entity.
(d)
The Seller Entities have no “leased employees” within the meaning of Internal Revenue Code Section 414(n).
(e)
The Seller Entities have, or will have no later than the Closing Date, paid all accrued salaries, bonuses, commissions, and other
wages due to be paid through the Closing Date. Each of the Seller Entities is and at all times has been in material compliance
with all Law governing the employment of labor and the withholding of Taxes, including all contractual commitments and all such
Laws relating to wages, hours, affirmative action, collective bargaining, discrimination, civil rights, disability accommodation,
employee leave, unemployment, worker classification, immigration, safety and health, workers’ compensation and the collection
and payment of withholding or Social Security Taxes and similar Taxes.
(f)
There have not been any wage and hour claims, discrimination, disability accommodation, or other employment claims or charges
by, or any allegations of sexual or other misconduct, harassment or discrimination have been made against, any current, former
or prospective employee of any Seller Entity since December 31, 2017, nor, to Seller’s Knowledge, are there any such claims
or charges currently threatened by any current, former or prospective employee of any Seller Entity. To the Knowledge of Seller,
there are no governmental investigations open with or under consideration by the United States Department of Labor (“DOL”),
Equal Employment Opportunity Commission, or any other federal or state governmental body charged with administering or enforcing
employment related Laws. No Seller Entity has entered into any settlement agreement related to allegations of sexual or other
misconduct, harassment or discrimination by any employee.
(g)
All of the Seller Entities’ employees are employed in the United States and are either United States citizens or are legally
entitled to work in the United States under the Immigration Reform and Control Act of 1986, as amended, other United States immigration
Laws and the Laws related to the employment of non-United States citizens applicable in the state in which the employees are employed.
The Seller Entities have completed a Form I-9 (Employment Eligibility Verification) for each employee, and each such Form I-9
has since been updated as required by applicable Law and is correct and complete in all material respects.
(h)
Since December 31, 2017, none of the Seller Entities has implemented any plant closing or mass layoff, as defined under the WARN
Act, without providing notice in accordance with the WARN Act, and no such actions are currently contemplated, planned or announced.
(i)
The Seller Entities have (i) implemented, to the extent required, policies and procedures to enable social distancing and remote
working environments for employees of the Seller Entities, (ii) taken commercially reasonable steps to ensure regular disinfection
and cleaning of work areas, including offices, restrooms, common areas and all high-touch surfaces in the workplace, and (iii)
required all employees who report experiencing symptoms of COVID-19 (including cough, shortness of breath or fever) to either
stay home or to go home immediately, as applicable. The Seller Entities have complied in all material respects with all applicable
Laws related to the Pandemic, including “shelter in place,” “essential business” and similar Pandemic
Measures and applicable Laws concerning employee leaves of absence. Section 4.18(i) of Seller’s Disclosure Memorandum lists
all of the following for the Seller Entities since March 1, 2020, or otherwise in response to or in connection with the Pandemic
or business circumstances related thereto: (i) employee furloughs; (ii) reductions in employee salary, other compensation, benefits
or hours; (iii) employee lay-offs or terminations; or (iv) other material changes in employee policies, practices or terms and
conditions.
(j)
Reserved.
4.19. Employee
Benefit Plans.
(a)
Seller has made available to Buyer prior to the execution of this Agreement, true, complete and correct copies of each Employee
Benefit Plan (including all amendments thereto), that has been adopted, maintained, sponsored in whole or in part by, or contributed
to or required to be contributed to by any Seller Entity or Seller ERISA Affiliate for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries or under which employees, retirees, former employees, dependents,
spouses, directors, independent contractors, or other beneficiaries are eligible to participate or with respect to which Seller
or any Seller ERISA Affiliate has or may have any obligation or Liability (each, a “Seller Benefit Plan”).
For the avoidance of doubt, the term “Seller Benefit Plans” includes plans, programs, policies, and arrangements sponsored
or maintained by a third-party professional employer organization in which the current or former employees, retirees, dependents,
spouses, directors, Independent Contractors, or other beneficiaries of a Seller Entity or any of its affiliates are eligible to
participate. Section 4.19(a) of Seller’s Disclosure Memorandum has a complete and accurate list of all Seller Benefit Plans.
No Seller Benefit Plan is subject to any Laws other than those of the United States or any state, county, or municipality in the
United States. Seller has made available to Buyer prior to the execution of this Agreement (i) all trust agreements or other funding
arrangements for all Seller Benefit Plans, (ii) all determination letters, opinion letters, information letters or advisory opinions
issued by the IRS, the DOL or the Pension Benefit Guaranty Corporation (“PBGC”) during this calendar year or
any of the preceding three calendar years, (iii) annual reports or returns, audited or unaudited financial statements, actuarial
reports and valuations prepared for any Seller Benefit Plan for the current plan year and the preceding plan year, (iv) the most
recent summary plan descriptions and any material modifications thereto, (v) any correspondence with the DOL, IRS, PBGC, or any
other governmental entity regarding a Seller Benefit Plan, and (vi) all actuarial valuations of Seller Benefit Plans.
(b)
Each Seller Benefit Plan is and has been maintained in compliance with the terms of such Seller Benefit Plan, and in compliance
with the applicable requirements of the Internal Revenue Code, ERISA, and any other applicable Laws in all material respects.
No Seller Benefit Plan is required to be amended within the 90-day period beginning on the Closing Date in order to continue to
comply with ERISA, the Internal Revenue Code, and other applicable Law. Each Seller Benefit Plan that is intended to be qualified
under Section 401(a) of the Internal Revenue Code is so qualified and has received a favorable determination letter, or for a
prototype plan, opinion letter, from the IRS that is still in effect and applies to the Seller Benefit Plan and on which such
Seller Benefit Plan is entitled to rely. Nothing has occurred and no circumstance exists that would be reasonably expected to
result in the loss of the qualified status of such Seller Benefit Plan. Within the past three years, no Seller Entity has taken
any action to take material corrective action or make a filing under any voluntary correction program of the IRS, DOL or any other
Regulatory Authority with respect to any Seller Benefit Plan. All assets of each Seller Benefit Plan that is a retirement plan
consist exclusively of cash and actively traded securities.
(c)
There are no pending or, to the Knowledge of Seller, threatened claims or disputes under the terms of, or in connection with,
the Seller Benefit Plans other than claims for benefits in the Ordinary Course that are not expected to result in material liability
to any Seller Entity, and no action, proceeding, prosecution, inquiry, hearing or investigation or audit has been commenced with
respect to any Seller Benefit Plan.
(d)
No Seller Entity or any Affiliate of Seller has engaged in any prohibited transaction for which there is not an exemption, within
the meaning of Section 4975 of the Internal Revenue Code or Section 406 of ERISA, with respect to any Seller Benefit Plan and
no prohibited transaction has occurred with respect to any Seller Benefit Plan that would be reasonably expected to result in
any Liability or excise Tax under ERISA or the Internal Revenue Code. No Seller Entity, Seller Entity employee, nor any committee
of which any Seller Entity employee is a member has breached his or her fiduciary duty with respect to a Seller Benefit Plan in
connection with any acts taken (or failed to be taken) with respect to the administration or investment of the assets of any Seller
Benefit Plan. To Seller’s Knowledge, no fiduciary, within the meaning of Section 3(21) of ERISA, who is not a Seller Entity
or any Seller Entity employee, has breached his or her fiduciary duty with respect to a Seller Benefit Plan or otherwise has any
Liability in connection with any acts taken (or failed to be taken) with respect to the administration or investment of the assets
of any Seller Benefit Plan. The treatment of the awards of Seller Equity Rights as required under Section 2.3 of this Agreement
is permitted by applicable Law and the terms of the applicable plan and award agreement.
(e)
Neither Seller nor any Seller ERISA Affiliate has at any time been a party to or maintained, sponsored, contributed to or has
been obligated to contribute to, or had any Liability with respect to, or would reasonably be expected to have any such obligation
to contribute to or Liability with respect to: (i) a plan subject to Title IV of ERISA, Section 302 of ERISA, or Section 412 of
the Internal Revenue Code; (ii) a “multiemployer plan” (as defined in ERISA Section 3(37) and 4001(a)(3)); (iii) a
“multiple employer plan” (as defined in 29 C.F.R. § 4001.2) or a plan subject to Section 413(c) of the Internal
Revenue Code; (iv) a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA or applicable state
law); (v) except as set forth on Section 4.19(e) of Seller’s Disclosure Memorandum, a self-funded health or welfare benefit
plan; or (vi) any voluntary employees’ beneficiary association (within the meaning of Section 501(c)(9) of the Internal
Revenue Code). Each self-funded health or welfare benefit plan set forth on Section 4.19(e) of Seller’s Disclosure Memorandum
is covered under a stop-loss insurance policy, and Seller has provided Buyer with copies of each such stop-loss insurance policy.
(f)
Each Seller Benefit Plan or other arrangement of a Seller Entity that is a “nonqualified deferred compensation plan”
within the meaning of Section 409A of the Internal Revenue Code has a plan document that satisfies the requirements of Section
409A of the Internal Revenue Code and has been operated in compliance with the terms of such plan document and the requirements
of Section 409A of the Internal Revenue Code in all material respects, in each case such that no Tax is or has been due or payable
under Section 409A(a)(1) of the Internal Revenue Code.
(g)
Each Seller Benefit Plan that is a health or welfare plan has been amended and administered in accordance with the requirements
of the Patient Protection and Affordable Care Act of 2010 in all material respects. No Seller Entity has any Liability or obligation
to provide postretirement health, medical or life insurance benefits to any Seller Entity’s employees or former employees,
officers, or directors, or any dependent or beneficiary thereof, except as otherwise required under state or federal benefits
continuation Laws and for which the covered individual pays the full cost of coverage. No Tax under Internal Revenue Code Sections
4980, 4980B through 4980I, or 5000 has been incurred with respect to any Seller Benefit Plan and no circumstance exists which
would reasonably be expected to give rise to such Tax.
(h)
Reserved.
(i)
All contributions required to be made to any Seller Benefit Plan by applicable Law or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies funding any Seller Benefit Plan, for any period
through the date hereof, have been timely made or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected on the Books and Records of Seller.
(j)
Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either
alone or in conjunction with any other event) result in, cause the vesting, exercisability or delivery of, or increase in the
amount or value of, any payment, right or other benefit to any employee, officer, director or other service provider of any Seller
Entity, or result in any (a) requirement to fund any benefits or set aside benefits in a trust (including a rabbi trust), (b)
limitation on the right of any Seller Entity to amend, merge, terminate or receive a reversion of assets from any Seller Benefit
Plan or related trust, (c) acceleration of the time of payment or vesting of any such payment, right, compensation or benefit,
or (d) entitlement by any recipient of any payment or benefit to receive a “gross up” payment for any income or other
Taxes that might be owed with respect to such payment or benefit. Without limiting the generality of the foregoing, no amount
paid or payable (whether in cash, in property, or in the form of benefits) by the Seller Entities in connection with the transactions
contemplated hereby (either solely as a result thereof or as a result of such transactions in conjunction with any other event)
will be an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code. Section 4.19(j)
of Seller’s Disclosure Memorandum sets forth accurate and complete data with respect to each individual who has a contractual
right to severance pay or benefits (or increase in severance pay or benefits, including the acceleration of any payment or vesting)
triggered by a change in control and the amounts potentially payable to each such individual in connection with the execution
and delivery of this Agreement or the consummation of the transactions contemplated hereby (either alone or in conjunction with
any other event) or as a result of a termination of employment or service, taking into account any contractual provisions relating
to Section 280G of the Internal Revenue Code. No Seller Benefit Plan provides for, and no Seller Entity has any obligation or
commit to provide, the gross-up or reimbursement of Taxes under Internal Revenue Code Section 4999 or 409A, or otherwise.
4.20. Material
Contracts.
(a)
None of the Seller Entities, nor any of their respective Assets, businesses, or operations, is a party to, or is bound by or receives
benefits under, any Contract (whether written or oral), (i) that is either material to any Seller Entity or that would be required
to be filed as an exhibit to a Form 10-K filed by any Seller Entity with the SEC if the Seller Entity were required to file or
voluntarily filed such Form 10-K, (ii) that is an employment, severance, termination, consulting, or retirement Contract, (iii)
relating to the borrowing of money by any Seller Entity or the guarantee by any Seller Entity of any such obligation (other than
Contracts evidencing deposit liabilities, purchases of federal funds, fully secured repurchase agreements, advances and loans
from the Federal Home Loan Bank, and trade payables, in each case in the Ordinary Course) in excess of $50,000, including any
sale and leaseback transactions, capitalized leases and other similar financing arrangements, (iv) which prohibits or restricts
any Seller Entity (and/or, following consummation of the transactions contemplated by this Agreement, any Buyer Entity) from engaging
in any business activities in any geographic area, line of business or otherwise in competition with any other Person, (v) relating
to the purchase or sale of any goods or services by a Seller Entity (other than Contracts entered into in the Ordinary Course
and involving payments under any individual Contract not in excess of $75,000 over its remaining term or involving Loans, borrowings
or guarantees originated or purchased by any Seller Entity in the Ordinary Course), (vi) which obligates any Seller Entity to
conduct business with any third party on an exclusive or preferential basis, or requires referrals of business or any Seller Entity
to make available investment opportunities to any Person on a priority or exclusive basis, (vii) which limits the payment of dividends
by any Seller Entity, (viii) pursuant to which any Seller Entity has agreed with any third parties to become a member of, manage
or control a joint venture, partnership, limited liability company or other similar entity, (ix) pursuant to which any Seller
Entity has agreed with any third party to a change of control transaction such as an acquisition, divestiture or merger or
contains
a put, call or similar right involving the purchase or sale of any equity interests or Assets of any Person and which contains
representations, covenants, indemnities or other obligations (including indemnification, “earn-out” or other contingent
obligations) that are still in effect, (x) which relates to Intellectual Property of Seller, (xi) between any Seller Entity, on
the one hand, and (A) any officer or director of any Seller Entity, or (B) to the Knowledge of Seller, any (1) record or beneficial
owner of five percent or more of the voting securities of Seller, (2) Affiliate or family member of any such officer, director
or record or beneficial owner or (3) any other Affiliate of Seller, on the other hand, except those of a type available to employees
of Seller generally, (xii) that provides for payments to be made by any Seller Entity upon a change in control thereof, (xiii)
that may not be canceled by Buyer, Seller or any of their respective Subsidiaries (A) at their convenience (subject to no more
than 90 days’ prior written notice), or (B) without payment of a penalty or termination fee equal to or greater than $50,000
(assuming such Contract was terminated on the Closing Date), (xiv) containing any standstill or similar agreement pursuant to
which Seller has agreed not to acquire Assets or equity interests of another Person, (xv) that provides for indemnification by
any Seller Entity of any Person, except for non-material Contracts entered into in the Ordinary Course, (xvi) with or to a labor
union or guild (including any collective bargaining agreement), (xvii) that grants any “most favored nation” right,
right of first refusal, right of first offer or similar right with respect to any material Assets, or rights of any Seller Entity,
taken as a whole, (xviii) that would be terminable other than by a Seller Entity or under which a material payment obligation
would arise or be accelerated, in each case as a result of the Merger or the announcement or consummation of the transactions
contemplated by this Agreement (either alone or upon the occurrence of any additional acts or events), (xix) any other Contract
or amendment thereto that is material to any Seller Entity or their respective business or Assets and not otherwise entered into
in the Ordinary Course, (xx) any Seller Benefit Plans, pursuant to which any of the benefits thereunder will be increased, or
the vesting of the benefits will be accelerated, by the occurrence of the execution or delivery of this Agreement, the obtainment
of the Seller Shareholder Approval or the consummation of any of the transactions contemplated by this Agreement, or the value
of any of benefits under which will be calculated on the basis of any of the transactions contemplated by this Agreement, (xxi)
that is a settlement, consent or similar Contract and contains any material continuing obligations of any Seller Entity, or (xxii)
that is a consulting Contract or data processing, software programming or licensing Contract involving the payment of more than
$50,000 per annum (other than any such contracts which are terminable by any Seller Entity on 30 days or less notice without any
required payment or other conditions, other than the condition of notice). Each Contract of the type described in this Section
4.20(a), whether or not set forth in Seller’s Disclosure Memorandum, together with all Contracts referred to in Sections
4.13 and 4.19(a), are referred to herein as the “Seller Contracts.”
(b)
With respect to each Seller Contract: (i) the Seller Contract is legal, valid and binding on a Seller Entity and is in full force
and effect and is enforceable in accordance with its terms; (ii) no Seller Entity is in Default thereunder; (iii) no Seller Entity
has repudiated or waived any material provision of any such Seller Contract; (iv) no other party to any such Seller Contract is,
to the Knowledge of Seller, in Default or has repudiated or waived any material provision thereunder; and (v) there is not pending
or, to the Knowledge of Seller, threatened cancellations of any Seller Contract.
(c)
Seller has made available true, complete and correct copies of each Seller Contract in effect as of the date hereof. All of the
indebtedness of any Seller Entity for money borrowed is prepayable at any time by such Seller Entity without penalty or premium.
4.21. Agreements
with Regulatory Authorities.
Subject
to Section 10.15, no Seller Entity is subject to any cease-and-desist or other Order or enforcement action issued by, or is a
party to any Contract with, or is a party to any commitment letter, safety and soundness compliance plan, or similar undertaking
to, or is subject to any Order or directive by, or has been ordered to pay any civil money penalty by, or has been a recipient
of any supervisory letter from, or has adopted any policies,
procedures or board resolutions at the request or suggestion of any
Regulatory Authority that currently restricts in any material respect the conduct of its business or that in any material manner
relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management, its business,
or Seller Bank’s acceptance of brokered deposits (each, whether or not set forth in Seller’s Disclosure Memorandum,
a “Seller Regulatory Agreement”), nor has any Seller Entity been advised in writing or, to Seller’s Knowledge,
orally, since December 31, 2017, by any Regulatory Authority that Seller Bank is in troubled condition or that the Regulatory
Authority is considering issuing, initiating, ordering, or requesting any such Seller Regulatory Agreement.
4.22.
Investment Securities.
(a)
Each Seller Entity has good title in all material respects to all securities and commodities owned by it (except those sold under
repurchase agreements, pledged to secure deposits of public funds, borrowings of federal funds or borrowings from the Federal
Reserve Banks or Federal Home Loan Banks or held in any fiduciary or agency capacity), free and clear of any Lien, except to the
extent such securities or commodities are pledged in the Ordinary Course and in accordance with prudent banking practices to secure
obligations of a Seller Entity. Such securities are valued on the books of Seller in accordance with GAAP in all material respects.
(b)
Each Seller Entity employs, to the extent applicable, investment, securities, risk management and other policies, practices and
procedures that Seller believes are prudent and reasonable in the context of their respective businesses, and each Seller Entity
has, since December 31, 2017, been in compliance with such policies, practices and procedures in all material respects.
4.23. Derivative
Instruments and Transactions.
All
Derivative Transactions whether entered into for the account of any Seller Entity or for the account of a customer of any Seller
Entity (a) were entered into in the Ordinary Course and in accordance with prudent banking practice and in all material respects
with applicable rules, regulations and policies of all applicable Regulatory Authorities, (b) are legal, valid and binding obligations
of the Seller Entity party thereto and, to the Knowledge of Seller, each of the counterparties thereto, and (c) are in full force
and effect and enforceable in accordance with their terms. The Seller Entities and, to the Knowledge of Seller, the counterparties
to all such Derivative Transactions, have duly performed, in all material respects, their obligations thereunder to the extent
that such obligations to perform have accrued. To the Knowledge of Seller, there are no material breaches, violations or Defaults
or allegations or assertions of such by any party pursuant to any such Derivative Transactions. The financial position of the
Seller Entities on a consolidated basis under or with respect to each such Derivative Transaction has been reflected in the Books
and Records of the Seller Entities in accordance with GAAP.
4.24. Legal
Proceedings.
(a)
There is no Litigation instituted or pending, or, to the Knowledge of Seller, threatened, against any Seller Entity or against
any current or former director, officer or employee of a Seller Entity in their capacities as such or against any Employee Benefit
Plan of any Seller Entity, or against any Asset, interest, or right of any of them, nor are there any Orders outstanding against
any Seller Entity or the Assets of any Seller Entity, in each case, that has had or would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on any Seller Entity.
(b)
Section 4.24(b)(i) of Seller’s Disclosure Memorandum sets forth a list of all Litigation as of the date of this Agreement
to which any Seller Entity is a party. There is no Order to which any Seller Entity is subject (or that, upon consummation of
the Merger, would apply to any Seller Entity).
4.25. Statements
True and Correct.
(a)
None of the information supplied or to be supplied by any Seller Entity or any Affiliate thereof for inclusion (including by incorporation
by reference) in the Registration Statement to be filed by Buyer with the SEC will, when supplied or when the Registration Statement
becomes effective (or when incorporated by reference), be false or misleading with respect to any material fact, or omit to state
any material fact necessary to make the statements therein not misleading. The portions of the Registration Statement and the
Proxy Statement/Prospectus relating to the Seller Entities and other portions within the reasonable control of the Seller Entities
will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder
at the time the Registration Statement becomes effective and at the time the Proxy Statement/Prospectus is filed with the SEC
and first mailed.
(b)
None of the information supplied or to be supplied by any Seller Entity or any Affiliate thereof for inclusion (including by incorporation
by reference) in the Proxy Statement/Prospectus, and any other documents to be filed by a Seller Entity or any Affiliate thereof
with any Regulatory Authority in connection with the transactions contemplated hereby, will, at the respective time such information
is supplied and such documents are filed (or when incorporated by reference), and with respect to the Proxy Statement/Prospectus,
when first mailed to the shareholders of Seller, be false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading,
or, in the case of the Proxy Statement/Prospectus or any amendment thereof or supplement thereto, at the time of Seller’s
Shareholders’ Meeting, be false or misleading with respect to any material fact, or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the solicitation of any proxy for Seller’s Shareholders’
Meeting.
4.26. State
Takeover Statutes and Takeover Provisions.
Seller
has taken all action required to be taken by it in order to exempt this Agreement and the transactions contemplated hereby from,
and this Agreement and the transactions contemplated hereby are exempt from, the requirements of any “moratorium,”
“fair price,” “affiliate transaction,” “business combination,” “control share acquisition”
or similar provision of any state anti-takeover Law (collectively, “Takeover Statutes”). No Seller Entity is
the beneficial owner (directly or indirectly) of more than 10% of the outstanding capital stock of Buyer entitled to vote in the
election of Buyer’s directors.
4.27. Opinion
of Financial Advisor.
Seller
has received the opinion of Stephens, Inc., which, if initially rendered verbally has been confirmed by a written opinion, dated
the date of this Agreement, to the effect that, as of such date, and subject to the various assumptions, procedures, matters,
qualifications, and limitations on the scope of review undertaken by Stephens, Inc., as set forth therein, the consideration to
be paid to the Holders of Seller Common Stock in the Merger is fair, from a financial point of view, to such Holders. Such opinion
has not been amended or rescinded.
4.28. Tax
and Regulatory Matters.
No
Seller Entity or, to the Knowledge of Seller, any Affiliate thereof has taken or agreed to take any action, and Seller does not
have any Knowledge of any agreement, plan or other circumstance, that is reasonably likely to (a) prevent the Merger from qualifying
as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code or (b) materially impede or
delay receipt of any of the Requisite Regulatory Approvals.
4.29.
Loan Matters.
(a)
No Seller Entity is a party to any written or oral Loan in which any Seller Entity is a creditor which as of September 30, 2021,
had an outstanding balance of $25,000 or more and under the terms of which the obligor was, as of September 30, 2021, over 90
days or more delinquent in payment of principal or interest and not on a non-accrual status. Except as such disclosure may be
limited by any applicable Law, Section 4.29(a) of Seller’s Disclosure Memorandum sets forth a true, complete and correct
list of all of the Loans of the Seller Entities that, as of September 30, 2021, had an outstanding balance of $25,000 or more
and were (i) on a non-accrual status, (ii) classified by the Seller Entity as “Other Loans Specially Mentioned,” “Special
Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,”
“Credit Risk Assets,” “Concerned Loans,” “Watch List” or words of similar import, or (iii)
subject to a deferral or payment modification (including the date on which such Loans are to return to the contractual payment
schedule in place prior to the deferral or payment modification), in any case (i), (ii) or (iii), together with the principal
amount of and accrued and unpaid interest on each such Loan and the aggregate principal amount of and accrued and unpaid interest
on such Loans as of September 30, 2021.
(b)
Each Loan currently outstanding (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine
and what they purport to be, (ii) to the extent secured, has been secured by valid Liens which have been perfected, and (iii)
is a legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms (except as may
be limited by the Bankruptcy and Equity Exceptions). The notes or other credit or security documents with respect to each such
outstanding Loan were in compliance in all material respects with all applicable Laws at the time of origination or purchase by
a Seller Entity and are complete and correct in all material respects.
(c)
Each outstanding Loan (including Loans held for resale to investors) was solicited and originated, and is and has been administered
and, where applicable, serviced, and the relevant Loan files are being maintained, in all material respects, in accordance with
the relevant notes or other credit or security documents, the Seller Entity’s written underwriting standards (and, in the
case of Loans held for resale to investors, the underwriting standards, if any, of the applicable investors) and with all applicable
requirements of Laws.
(d)
None of the Contracts pursuant to which any Seller Entity has sold Loans or pools of Loans or participations in Loans or pools
of Loans contains any obligation to repurchase such Loans or interests therein solely on account of a payment default by the obligor
on any such Loan. Each Loan included in a pool of Loans originated, securitized or acquired by any Seller Entity (a “Pool”)
meets all eligibility requirements (including all applicable requirements for obtaining mortgage insurance certificates and Loan
guaranty certificates) for inclusion in such Pool. All such Pools have been finally certified or, if required, recertified in
accordance with all applicable Laws, rules and regulations, except where the time for certification or recertification has not
yet expired. No Pools have been improperly certified, and, except as would not be material to Seller and the Seller Subsidiaries,
no Loan has been bought out of a Pool without all required approvals of the applicable investors.
(e)
(i) Section 4.29(e) of Seller’s Disclosure Memorandum sets forth a list of all Loans as of the date hereof by a Seller Entity
to any directors, executive officers and principal shareholders (as such terms are defined in Regulation O of the Federal Reserve
(12 C.F.R. Part 215) (“Regulation O”)) of any Seller Entity, (ii) there are no employee, officer, director,
principal shareholder or other affiliate Loans on which the borrower is paying a rate other than that reflected in the note or
other relevant credit or security agreement or on which the borrower is paying a rate which was not in compliance with Regulation
O, and (iii) all such Loans are and were originated in compliance in all material respects with all applicable Laws.
(f)
Subject to Section 10.15, no Seller Entity is now nor has it ever been since December 31, 2017, subject to any material fine,
suspension, settlement or other Contract or other administrative agreement or sanction by, or any reduction in any loan purchase
commitment from, any Regulatory Authority relating to the origination, sale or servicing of mortgage or consumer Loans.
4.30. Deposits.
All
of the deposits held by Seller Bank (including the records and documentation pertaining to such deposits) have been established
and are held in compliance in all material respects with (a) all applicable policies, practices and procedures of Seller Bank
and (b) all applicable Laws, including Money Laundering Laws and anti-terrorism or embargoed persons requirements. All of the
deposits held by Seller Bank are insured to the maximum limit set by the FDIC, and the FDIC premium and all assessments have been
fully paid, and no proceedings for the termination or revocation of such insurance are pending, or, to the Knowledge of Seller,
threatened.
4.31. Allowance
for Loan and Lease Losses.
The
allowance for loan and lease losses (“ALLL”) reflected in the Seller Financial Statements was, as of the date
of each of the Seller Financial Statements, in compliance with Seller’s existing methodology for determining the adequacy
of the ALLL and in compliance in all material respects with the standards established by the applicable Regulatory Authority,
the Financial Accounting Standards Board and GAAP, and, as reasonably determined by management under the circumstances, is adequate.
4.32. Insurance.
Seller
Entities are insured with reputable insurers against such risks and in such amounts as the management of Seller reasonably has
determined to be prudent and consistent with industry practice. Section 4.32 of Seller’s Disclosure Memorandum contains
a true, complete and correct list and a brief description (including the name of the insurer, agent, coverage and the expiration
date) of all insurance policies in force on the date hereof with respect to the business and Assets of the Seller Entities, correct
and complete copies of which policies have been provided to Buyer prior to the date hereof. The Seller Entities are in material
compliance with their insurance policies and are not in Default under any of the material terms thereof. Each such policy is outstanding
and in full force and effect and, except for policies insuring against potential liabilities of officers, directors and employees
of the Seller Entities, Seller or Seller Bank is the sole beneficiary of such policies. All premiums and other payments due under
any such policy have been paid, and all claims thereunder have been filed in due and timely fashion. To Seller’s Knowledge,
no Seller Entity has received any written notice of cancellation or non-renewal of any such policies, nor, to Seller’s Knowledge,
is the termination of any such policies threatened.
4.33. OFAC;
Sanctions.
No
Seller Entity nor any director or officer or, to the Knowledge of Seller, any Representative or other Person acting on behalf
of any Seller Entity has (a) engaged in any services (including financial services), transfers of goods, software, or technology,
or any other business activity related to (i) Cuba, Iran, North Korea, Sudan, Syria or the Crimea region of Ukraine claimed by
Russia (“Sanctioned Countries”), (ii) the government of any Sanctioned Country, (iii) any person, entity or
organization located in, resident in, formed under the laws of, or owned or controlled by the government of, any Sanctioned Country,
or (iv) any Person made subject of any sanctions administered or enforced by the United States Government, including, without
limitation, the list of Specially Designated Nationals of the U.S. Department of the Treasury’s Office of Foreign Assets
Control, or by the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions
authority (collectively, “Sanctions”), (b) engaged in any transfers of goods, technologies or services (including
financial services) that may assist the governments of Sanctioned Countries or facilitate money laundering or other activities
proscribed by United States Law, (c) is a Person currently the subject of any Sanctions or (d) is located, organized or resident
in any Sanctioned Country.
4.34.
Brokers and Finders.
Except
for Stephens, Inc., neither Seller nor any of its officers, directors, employees, or Affiliates has employed any broker or finder
or incurred any Liability for any financial advisory fees, investment bankers’ fees, brokerage fees, commissions, or finders’
fees in connection with this Agreement or the transactions contemplated hereby.
4.35. Transactions
with Affiliates and Insiders.
There
are no Contracts, plans, arrangements or other transactions, including extensions of credit, between any Seller Entity, on the
one hand, and (a) any officer, director or record or beneficial owner of five percent or more of the voting securities of any
Seller Entity, (b) to Seller’s Knowledge, any (i) record or beneficial owner of five percent or more of the voting securities
of Seller or (ii) Affiliate or family member of any such officer, director or record or beneficial owner, or (c) any other Affiliate
of Seller, on the other hand, except those, in each case, of a type available to employees of Seller generally and, in the case
of Seller Bank, that are in compliance with Regulation O and Regulation W.
4.36. No
Investment Adviser Subsidiary.
No
Seller Entity provides investment management, investment advisory or sub-advisory services to any Person (including management
and advice provided to separate accounts and participation in wrap fee programs) and is required to register with the SEC as an
investment adviser under the Investment Advisers Act of 1940, as amended.
4.37. No
Broker-Dealer Subsidiary.
No
Seller Entity is a broker-dealer required to be registered under the Exchange Act with the SEC.
4.38. No
Insurance Subsidiary.
No
Seller Entity conducts insurance operations that require a license from any Regulatory Authority under any applicable Law.
ARTICLE
5
REPRESENTATIONS AND WARRANTIES OF BUYER
Except
as Previously Disclosed, Buyer hereby represents and warrants to Seller as follows:
5.1. Reserved.
5.2.
Organization, Standing, and Power.
(a)
Status of Buyer. Buyer is a corporation duly organized, validly existing, and in good standing under the Laws of the State
of Arkansas, is authorized under the Laws of the State of Arkansas to engage in its business as currently conducted and otherwise
has the corporate power and authority to own, lease and operate all of its material Assets and to conduct its business in the
manner in which its business is now being conducted. Buyer is duly qualified or licensed to transact business as a foreign corporation
in good standing in the states of
the United States and foreign jurisdictions in which its ownership of Assets or conduct of business
requires such qualification or licensure, except where failure to be so qualified or licensed has not had or would not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse Effect on Buyer. Buyer is a bank holding company
duly registered with the Federal Reserve under the BHC Act and has elected to be, and qualifies as, a financial holding company
under the BHC Act.
(b)
Status of Buyer Bank. Buyer Bank is a direct, wholly owned Subsidiary of Buyer, is duly organized, validly existing and
in good standing under the Laws of the State of Arkansas, is authorized under the Laws of the State of Arkansas to engage in its
business as currently conducted and otherwise has the corporate power and authority to own, lease and operate all of its material
Assets and to conduct its business in the manner in which its business is now being conducted. Buyer Bank is authorized by the
Arkansas State Bank Department (“ASBD”) to engage in the business of banking as a commercial bank. Buyer Bank
is in good standing in each jurisdiction in which its ownership of Assets or conduct of business requires such qualification,
except where failure to be so qualified has not had or would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on Buyer Bank.
5.3. Authority;
No Breach by Agreement.
(a)
Authority. Buyer has the corporate power and authority necessary to execute, deliver, and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated herein, including the Merger, have been duly and validly authorized and
approved by all necessary corporate action in respect thereof on the part of Buyer (including, approval by, and a determination
by the board of directors of Buyer that this Agreement is advisable and in the best interests of Buyer’s shareholders).
This Agreement has been duly executed and delivered by Buyer. Subject to the Seller Shareholder Approval, and assuming the due
authorization, execution and delivery by Seller, this Agreement represents a legal, valid, and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms (except as may be limited by the Bankruptcy and Equity Exceptions).
(b)
No Conflicts. Neither the execution and delivery of this Agreement by Buyer, nor the consummation by Buyer of the transactions
contemplated hereby, nor compliance by Buyer with any of the provisions hereof, will (i) conflict with or result in a breach of
any provision of Buyer’s articles of incorporation, bylaws or other governing instruments, or any resolution adopted by
the board of directors or the shareholders of any Buyer Entity, or (ii) subject to receipt of the Requisite Regulatory Approvals,
(x) violate any Law applicable to any Buyer Entity or any of their respective Assets or (y) violate, conflict with, constitute
or result in a Default under or the loss of any benefit under, or result in the creation of any Lien upon any of the respective
Assets of any Buyer Entity under any of the terms, conditions or provisions of any Contract or Permit of any Buyer Entity or under
which any of their respective Assets may be bound, except in the case of clause (y) above where such violations, conflicts or
Defaults have not had or would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse
Effect on Buyer.
(c)
Consents. Other than in connection or compliance with the provisions of the Securities Laws (including the filing and declaration
of effectiveness of the Registration Statement), applicable state corporate and securities Laws, the rules of Nasdaq, the ABCA,
the TBOC, the Laws of the States of Arkansas and Texas, the FDIA, the BHC Act, and the Requisite Regulatory Approvals, no notice
to, filing with, or Consent of, any Regulatory Authority or any third party is necessary for the consummation by Buyer of the
Merger and the other transactions contemplated by this Agreement. As of the date hereof, Buyer has no Knowledge of any reason
why the Requisite Regulatory Approvals will not be received in order to permit consummation of the Merger on a timely basis.
5.4. Capitalization
of Buyer.
(a)
Ownership. The authorized capital stock of Buyer consists of (i) 175,000,000 shares of Buyer Common Stock, of which 114,829,595
shares are issued and outstanding as of November 16, 2021, and (ii) 40,040,000 shares of preferred stock, par value $0.01 per
share of Buyer, of which 767 shares are issued and outstanding as of November 16, 2021. As of November 16, 2021, no more than
8,500,000 shares of Buyer Common Stock are subject to Buyer Stock Options or other Equity Rights in respect of Buyer Common Stock,
and no more than 8,500,000 shares of Buyer Common Stock were reserved for future grants under the Buyer Stock Plans. Upon any
issuance of any shares of Buyer Common Stock in accordance with the terms of the Buyer Stock Plans, such shares will be duly and
validly issued and fully paid and nonassessable.
(b)
Other Rights or Obligations. All of the issued and outstanding shares of capital stock (and other equity interest) of Buyer
are, and all shares of Buyer Common Stock to be issued in exchange for shares of Seller Common Stock upon consummation of the
Merger, when issued in accordance with the terms of this Agreement, will be, duly authorized and validly issued and outstanding,
and are fully paid and nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof.
None of the outstanding shares of capital stock (or other equity interest) of Buyer has been issued in violation of or subject
to any preemptive rights or other rights to subscribe for or purchase securities of the current or past shareholders of Buyer.
(c)
Outstanding Equity Rights. Other than the Buyer Stock Options and the Buyer Restricted Stock Awards, in each case, outstanding
as of the date of this Agreement, there are no existing Equity Rights with respect to the securities of Buyer or Buyer Bank as
of the date of this Agreement.
5.5. Buyer
Subsidiaries.
Buyer
or Buyer Bank owns all of the issued and outstanding shares of capital stock (and other equity interests) of the Buyer Subsidiaries.
The deposits in Buyer Bank are insured to the maximum limit set by the FDIC, and the FDIC premium and all assessments have been
fully paid when due. No proceedings for the revocation or termination of such deposit insurance are pending or, to the Knowledge
of Buyer, threatened.
5.6. Regulatory
Reports.
(a)
Buyer’s Reports. Since December 31, 2017, Buyer has filed on a timely basis, all forms, filings, registrations, submissions,
statements, certifications, returns, information, data, reports and documents required to be filed or furnished by it with any
Regulatory Authority, and such reports were complete and accurate in all material respects and in compliance in all material respects
with the requirements of any applicable Law and the requirements of the applicable Regulatory Authority. Buyer is in compliance
in all material respects with the applicable listing and corporate governance rules and regulations of Nasdaq.
(b)
Buyer’s SEC Reports. An accurate and complete copy of each final registration statement, prospectus, report, schedule
and definitive proxy statement filed with or furnished to the SEC by any Buyer Entity pursuant to the Securities Act or the Exchange
Act, as the case may be, since December 31, 2017 (the “Buyer SEC Reports”) is publicly available. No such Buyer
SEC Report, at the time filed, furnished or communicated (and, in the case of registration statements, prospectuses and proxy
statements, on the dates of effectiveness, dates of first sale of securities and the dates of the relevant meetings, respectively),
contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances in which they were made, not misleading, except that information
filed or furnished as of a later date (but before the date of this Agreement) shall be deemed to modify information as of an earlier
date. As of their respective dates, all Buyer SEC Reports filed or furnished under the Securities Act and the Exchange Act complied
as to form in all material respects with the published rules and regulations of the SEC with respect thereto. As of the date of
this Agreement, no executive officer of Buyer has failed in any
respect to make the certifications required of him or her under
Section 302 or 906 of the Sarbanes-Oxley Act. As of the date of this Agreement, there are no outstanding comments from or material
unresolved issues raised by the SEC with respect to any of the Buyer SEC Reports.
(c)
Buyer Bank’s Reports. Since December 31, 2017, each of Buyer and Buyer Bank has duly filed with ASBD, the Federal
Reserve, and any other applicable Regulatory Authority, as the case may be, all reports, forms, returns, filings, information,
data, registrations, submissions, statements, certifications and documents required to be filed or furnished by each of Buyer
and Buyer Bank under any applicable Law, including any and all federal and state banking Laws, and such reports were complete
and accurate in all material respects and in compliance in all material respects with the requirements of any applicable Law.
Subject to Section 10.15, there (i) is no unresolved violation, criticism, or exception by any Regulatory Authority with respect
to any report or statement relating to any examinations, inspections or investigations of any Buyer Entity and (ii) except for
routine communications between any Buyer Entity and any Regulatory Authority in connection with normal examinations, has been
no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Authority with respect to the business,
operations, policies or procedures of any Buyer Entity.
5.7. Financial
Matters.
(a)
Financial Statements. The Buyer Financial Statements included or incorporated by reference in the Buyer SEC Reports (i)
have been prepared from, and are in accordance with, the Books and Records of the Buyer Entities, (ii) have been prepared in accordance
with GAAP, regulatory accounting principles and applicable accounting requirements and, if applicable, with the published rules
and regulations of the SEC, in each case, consistently applied except as may be otherwise indicated in the notes thereto and except
with respect to the unaudited financial statements for the omission of footnotes and (iii) fairly present in all material respects
the consolidated financial condition of the Buyer Entities as of the respective dates set forth therein and the consolidated results
of operations, shareholders’ equity and cash flows of the Buyer Entities for the respective periods set forth therein, subject
in the case of the interim financial statements to year-end adjustments. The consolidated Buyer Financial Statements to be prepared
after the date of this Agreement and prior to the Closing (A) will have been prepared in accordance with GAAP, regulatory accounting
principles and applicable accounting requirements and, if applicable, with the published rules and regulations of the SEC, in
each case, consistently applied except as may be otherwise indicated in the notes thereto and except with respect to unaudited
financial statements for the omission of footnotes and year-end adjustments, and (B) will fairly present in all material respects
the consolidated financial condition of Buyer as of the respective dates set forth therein and the results of operations, shareholders’
equity (except with respect to unaudited financial statements) and cash flows (except with respect to unaudited financial statements)
of Buyer for the respective periods set forth therein, subject in the case of unaudited financial statements to the omission of
footnotes and year-end adjustments.
(b)
Call Reports. The financial statements contained in the Call Reports of Buyer Bank for the periods ending on or after December
31, 2017 (i) have been prepared in accordance with GAAP (except to the extent applicable Law requires otherwise) and regulatory
accounting principles consistently applied, except as may be otherwise indicated in the notes thereto and except for the omission
of footnotes and (ii) fairly present in all material respects the financial condition of Buyer Bank as of the respective dates
set forth therein and the results of operations and shareholders’ equity for the respective periods set forth therein, subject
to year-end adjustments. The financial statements contained in the Call Reports of Buyer Bank to be prepared after the date of
this Agreement and prior to the Closing (A) will have been prepared in accordance with GAAP (except to the extent applicable Law
requires otherwise) and regulatory accounting principles consistently applied, except as may be otherwise indicated in the notes
thereto and except for the omission of footnotes, and (B) will fairly present in all material respects the financial condition
of Buyer Bank as of the respective dates set forth therein and the results of operations and shareholders’ equity of Buyer
Bank for the respective periods set forth therein, subject to year-end adjustments.
(c)
Systems and Processes. Each of Buyer and Buyer Bank has in place sufficient systems and processes that are customary for
a financial institution of the size of Buyer and Buyer Bank and that are designed to (i) provide reasonable assurances regarding
the reliability of financial reporting and the preparation of the Buyer Financial Statements and Buyer Bank’s financial
statements, including the Call Report and (ii) in a timely manner accumulate and communicate to Buyer’s and Buyer Bank’s
principal executive officer and principal financial officer the type of information that would be required to be disclosed in
Buyer Financial Statements and Buyer Bank’s financial statements, including the Call Report, or any forms, filings, registrations,
submissions, statements, certifications, returns, information, data, reports or documents required to be filed or provided to
any Regulatory Authority, (iii) provide that access to Buyer and Buyer Bank’s Assets is permitted only in accordance with
management’s authorization, and (iv) provide that the reporting of such Assets is compared with existing Assets at regular
intervals. Neither Buyer nor Buyer Bank nor, to Buyer’s Knowledge, any Representative of any Buyer Entity has received or
otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding
the adequacy of such systems and processes or the accuracy or integrity of Buyer Financial Statements, the Buyer Bank’s
financial statements, including the Call Reports, or the accounting or auditing practices, procedures, methodologies or methods
(including with respect to loan loss reserves, write-downs, charge-offs and accruals) of any Buyer Entity or their respective
internal accounting controls, including any material complaint, allegation, assertion or claim that any Buyer Entity has engaged
in questionable accounting or auditing practices. No attorney representing any Buyer Entity, whether or not employed by any Buyer
Entity, has reported evidence of a material violation of Securities Laws, breach of fiduciary duty or similar violation by Buyer
or any of its officers, directors or employees to the board of directors of Buyer or Buyer Bank or any committee thereof or to
any director or officer of Buyer or Buyer Bank. To Buyer’s Knowledge, there has been no instance of fraud by any Buyer Entity,
whether or not material, that occurred during any period covered by the Buyer Financial Statements.
(d)
Records. The records, systems, controls, data and information of the Buyer Entities are recorded, stored, maintained and
operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under
the exclusive ownership and direct control of a Buyer Entity or accountants (including all means of access thereto and therefrom),
except where such non-exclusive ownership and non-direct control has not had or would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on Buyer and Buyer Bank, taken as a whole. Buyer and Buyer Bank (i)
have implemented and maintain disclosure controls and procedures (as defined in Rule 13a-15 or 15d-15, as applicable, of the Exchange
Act) and (ii) have disclosed, based on their most recent evaluation prior to the date of this Agreement, to their outside auditors
and the audit committee of their respective boards of directors (Y) any significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) which could adversely affect their ability to record, process, summarize or report financial data and have disclosed to their
auditors any material weaknesses in internal control over financial reporting and (Z) any fraud, whether or not material, that
involves management or other employees who have a significant role in their internal control over financial reporting. To the
Knowledge of Buyer, there is no reason to believe that Buyer’s outside auditors and its chief executive officer and chief
financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations
adopted pursuant to Section 404 of the Sarbanes-Oxley Act, without qualification, when next due, if required.
(e)
Auditor Independence. The independent registered public accounting firm engaged to express its opinion with respect to
the Buyer Financial Statements included in the Buyer’s SEC Reports is, and has been throughout the periods covered thereby,
“independent” within the meaning of Rule 2-01 of Regulation S-X. As of the date hereof, the outside auditor for Buyer
and Buyer Bank has not resigned or been dismissed as a result of or in connection with any disagreements with Buyer or Buyer Bank
on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
5.8. Absence
of Undisclosed Liabilities.
No
Buyer Entity has incurred any Liability, except for Liabilities (a) incurred in the Ordinary Course since December 31, 2020, (b)
incurred in connection with this Agreement and the transactions contemplated hereby, or (c) that are accrued or reserved against
in the consolidated balance sheet of Buyer as of December 31, 2020 included in the Buyer Financial Statements at and for the period
ending December 31, 2020.
5.9. Absence
of Certain Changes or Events.
Since
December 31, 2020, there has not been a Material Adverse Effect on Buyer.
5.10. Tax.
(a)
All Buyer Entities have timely filed with the appropriate Taxing authorities all material Tax Returns in all jurisdictions in
which such Tax Returns are required to be filed, and such Tax Returns are correct and complete in all material respects. None
of the Buyer Entities is the beneficiary of any extension of time within which to file any Tax Return (other than any extensions
to file Tax Returns obtained in the Ordinary Course and automatically granted). All material Taxes of the Buyer Entities (whether
or not shown on any Tax Return) that are due have been fully and timely paid. There are no Liens for any material amount of Taxes
(other than a Lien for Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings) on
any of the Assets of any of the Buyer Entities. No claim has been made in the last six years in writing by an authority in a jurisdiction
where any Buyer Entity does not file a Tax Return that such Buyer Entity may be subject to Taxes by that jurisdiction.
(b)
None of the Buyer Entities has received any written notice of assessment or proposed assessment in connection with any material
amount of Taxes, and there are no threatened in writing or pending disputes, claims, audits or examinations regarding any Taxes
of any Buyer Entity or the Assets of any Buyer Entity. None of the Buyer Entities has waived any statute of limitations in respect
of any Taxes.
(c)
Each Buyer Entity has complied in all material respects with all applicable Laws relating to the withholding of Taxes and the
payment thereof to appropriate authorities, including Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee or independent contractor, and Taxes required to be withheld and paid pursuant to Sections 1441
and 1442 of the Internal Revenue Code or similar provisions under foreign Law.
(d)
During the two-year period ending on the date hereof, none of the Buyer Entities was a distributing corporation or a controlled
corporation in a transaction intended to be governed by Section 355 of the Internal Revenue Code. During the five-year period
ending on the date hereof, none of the Buyer Entities was a United States real property holding corporation within the meaning
of Section 897(c)(2) of the Internal Revenue Code.
(e)
None of the Buyer Entities have participated in any “reportable transaction” within the meaning of Treasury Regulation
Section 1.6011-4.
5.11. Compliance
with Laws.
(a)
Each Buyer Entity has, and since December 31, 2017, has had, in effect all Permits necessary for it to lawfully own, lease, or
operate its material Assets and to carry on its business as now conducted (and have paid all fees and assessments due and payable
in connection therewith), except where neither the cost of failure to hold nor the cost of obtaining and holding such Permit has
had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Buyer. There
has occurred no material
Default under any such Permit and to the Knowledge of Buyer no suspension or cancellation of any such
material Permit is threatened. None of the Buyer Entities:
(i)
is in material Default under any of the provisions of its articles of incorporation or association or bylaws (or other governing
instruments);
(ii)
is in material Default under any Laws, Orders, or material Permits applicable to its business or employees conducting its business;
or
(iii)
subject to Section 10.15, has since December 31, 2017 received any written notification or communication from any agency or department
of federal, state, or local government or any Regulatory Authority or the staff thereof asserting that any Buyer Entity is not
in compliance in any material respect with any Laws, Orders, or Permits or engaging in an unsafe or unsound activity or troubled
condition.
(b)
Each of Buyer and Buyer Bank is in compliance in all material respects with all applicable Laws, regulatory capital requirements,
Orders, or conditions imposed in writing by a Regulatory Authority, to which they or their Assets may be subject.
5.12. Legal
Proceedings.
There
is no Litigation instituted or pending, or, to the Knowledge of Buyer, threatened against any Buyer Entity, or against any current
or former director, officer or employee of a Buyer Entity in their capacities as such or Employee Benefit Plan of any Buyer Entity,
or against any Asset, interest, or right of any of them, nor are there any Orders outstanding against any Buyer Entity or the
Assets of any Buyer Entity, in each case, that has had or would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on any Buyer Entity.
5.13. Statements
True and Correct.
None
of the information supplied or to be supplied by any Buyer Entity or any Affiliate thereof for inclusion (including by incorporation
by reference) in the Registration Statement to be filed by Buyer with the SEC (or the Proxy Statement/Prospectus to be mailed
to Seller’s shareholders in connection with Seller’s Shareholders’ Meeting, or any other documents to be filed
by any Buyer Entity with the SEC or any other Regulatory Authority in connection with the transactions contemplated hereby) will,
when supplied or when the Registration Statement becomes effective (or when incorporated by reference) (or, with respect to the
Proxy Statement/Prospectus, when first mailed to the shareholders of Seller; or, with respect to any other documents, at the respective
times such documents are filed), be false or misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein not misleading. The portions of the Registration Statement and the Proxy Statement/Prospectus
relating to Buyer Entities and other portions within the reasonable control of Buyer Entities will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations thereunder at the time the Registration Statement
becomes effective and at the time the Proxy Statement/Prospectus is filed with the SEC and first mailed.
5.14.
Tax and Regulatory Matters.
No
Buyer Entity or, to the Knowledge of Buyer, any Affiliate thereof has taken or agreed to take any action, and Buyer does not have
any Knowledge of any agreement, plan or other circumstance, that is reasonably likely to (a) prevent the Merger from qualifying
as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code or (b) materially impede or
delay receipt of any of the Requisite Regulatory Approvals.
5.15. Brokers
and Finders.
Except
for Keefe, Bruyette & Woods, Inc., neither Buyer nor any of its officers, directors, employees, or Affiliates has employed
any broker or finder or incurred any Liability for any financial advisory fees, investment bankers’ fees, brokerage fees,
commissions, or finders’ fees in connection with this Agreement or the transactions contemplated hereby.
ARTICLE
6
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1. Affirmative
Covenants of Seller.
(a)
From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, unless the prior
written consent of Buyer shall have been obtained (which consent shall not be unreasonably withheld, delayed or conditioned),
and except as required by Law, otherwise expressly contemplated herein or as set forth in Section 6.1(a) of Seller’s Disclosure
Memorandum, Seller shall, and shall cause each of the Seller Subsidiaries to, (i) operate its business only in the Ordinary Course,
and (ii) use its reasonable best efforts to: (x) preserve intact its business (including its organization, Assets, goodwill and
insurance coverage), (y) maintain its rights, authorizations, franchise, advantageous business relationships with customers, vendors,
strategic partners, suppliers, and others doing business with it, and (z) maintain the services of its officers and Key Employees.
Notwithstanding anything to the contrary set forth in this Section 6.1 or Section 6.2, from the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Seller will use its reasonable best efforts to provide Buyer
with prior written notice of any actions Seller or any Seller Subsidiary takes with respect to the Pandemic, including Pandemic
Measures, that differ from or are inconsistent with actions taken by Seller with respect to the Pandemic prior to the date of
this Agreement.
(b)
Beginning on the date that is two weeks after the date hereof, and every two weeks thereafter, Seller shall provide, and shall
cause Seller Bank also to provide, to Buyer a report describing all of the following which has occurred in the prior two weeks:
(i)
new, renewed, extended, modified, amended or terminated Contracts that provide for aggregate annual payments of $50,000 or more
(provided that, if a Contract has a term of 12 months or less, it must be included only if it provides for aggregate payments
of $75,000 or more); and
(ii)
new Loans or commitments (including a letter of credit) for Loans in excess of $200,000, any renewals or extensions of existing
Loans or commitments for any Loans in excess of $200,000, or any material amendments or modifications to Loans in excess of $200,000.
(c)
Beginning with the month of November 2021, Seller shall provide, and shall cause Seller Bank also to provide, to Buyer a monthly
report and reasonable attestation, in the form set forth in Section 6.1(c) of the Buyer’s Disclosure Memorandum, concerning
Seller’s and Seller Bank’s asset quality. Such report and reasonable attestation shall reflect information as of the
end of the relevant month and shall be provided to Buyer no later than the tenth day after such month end (for example, the November
2021 report and reasonable attestation shall reflect information as of November 30, 2021, and shall be provided to Buyer no later
than December 10, 2021), unless the tenth day is not a Business Day, in which case such report and reasonable attestation will
be provided on the next Business Day.
6.2. Negative
Covenants of Seller.
From
the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, unless the prior written
consent of Buyer shall have been obtained (which consent shall not be
unreasonably withheld, delayed or conditioned), and except
as otherwise expressly contemplated herein or as set forth in Section 6.2 of Seller’s Disclosure Memorandum, Seller covenants
and agrees that it will not do or agree or commit to do, or cause or permit any Seller Subsidiary to do or agree or commit to
do, any of the following:
(a)
amend the certificate of formation, articles of incorporation, bylaws or other governing instruments of any Seller Entity;
(b)
incur, assume, guarantee, endorse or otherwise as an accommodation become responsible for any additional debt obligation or other
obligation for borrowed money (other than indebtedness of Seller to Seller Bank or of Seller Bank to Seller, or the creation of
deposit liabilities, purchases of federal funds, borrowings from any Federal Home Loan Bank or Federal Reserve, security repurchase
arrangements or other short term liquidity funding of Seller Bank, or sales of certificates of deposits, in each case incurred
in the Ordinary Course);
(c)
(i) repurchase, redeem, or otherwise acquire or exchange, directly or indirectly, any shares, or any securities convertible into
or exchangeable or exercisable for any shares, of the capital stock of any Seller Entity other than in connection with Seller
Benefit Plans, or (ii) make, declare, pay or set aside for payment any dividend or set any record date for or declare or make
any other distribution in respect of Seller’s capital stock or other equity interests (except for regular quarterly cash
dividends by Seller (and consistent with Seller’s past practice) at a rate not to exceed $0.12 per share of Seller Common
Stock; provided, however, that Seller shall not make, declare, or pay any such dividend if, as of the date of its action, Seller
would be unable to satisfy the conditions outlined in Section 8.2(f));
(d)
issue, grant, sell, pledge, dispose of, encumber, authorize or propose the issuance of, enter into any Contract to issue, grant,
sell, pledge, dispose of, encumber, or authorize or propose the issuance of, or otherwise permit to become outstanding, any additional
shares of Seller Common Stock or any other capital stock of any Seller Entity, or any stock appreciation rights, or any option,
warrant, or other Equity Right (other than issuances of Seller Common Stock in connection with the exercise of vested Seller Stock
Options or Seller Warrants, or the vesting of Seller Restricted Stock Units, in each case that were outstanding as of the close
of business on November 16, 2021; provided that such issuances of Seller Common Stock in connection with the exercise of Seller
Stock Options and Seller Warrants occur prior to the Determination Date);
(e)
directly or indirectly adjust, split, combine or reclassify any capital stock or other equity interest of any Seller Entity or
issue or authorize the issuance of any other securities in respect of or in substitution for shares of Seller Common Stock, or
sell, transfer, lease, mortgage, permit any Lien, or otherwise dispose of, discontinue or otherwise encumber (i) any shares of
capital stock or other equity interests of any Seller Entity (unless any such shares of capital stock or other equity interest
are sold or otherwise transferred to one of the Seller Entities) or (ii) any Asset other than pursuant to Contracts in force at
the date of the Agreement or sales of investment securities in the Ordinary Course;
(f)
(i) purchase any securities or make any acquisition of or investment in (except in the Ordinary Course), either by purchase of
stock or other securities or equity interests, contributions to capital, Asset transfers, purchase of any Assets (including any
investments or commitments to invest in real estate or any real estate development project) or other business combination, or
by formation of any joint venture or other business organization or by contributions to capital (other than by way of foreclosures
or acquisitions of control in a fiduciary or similar capacity or in satisfaction of debts previously contracted in good faith,
in each case in the Ordinary Course), any Person other than Seller Bank, or otherwise acquire direct or indirect control over
any Person or (ii) enter into a plan of consolidation, merger, share exchange, share acquisition, reorganization, recapitalization
or complete or partial liquidation or dissolution (other than consolidations, mergers or reorganizations solely among wholly owned
Seller Subsidiaries), or a letter of intent, memorandum of understanding or agreement in principle with respect thereto;
(g)
(i) grant any increase in compensation or benefits to the employees or officers of any Seller Entity, except as required by Law,
(ii) pay any (x) severance or termination pay or (y) bonus, in either case other than pursuant to a Seller Benefit Plan in effect
on the date hereof and in the case of clause (x) subject to receipt of an effective release of claims from the employee, and in
the case of clause (y) to the extent required under the terms of the Seller Benefit Plan without the exercise of any upward discretion,
(iii) enter into, amend, or increase the benefits payable under any severance, change in control, retention, bonus guarantees,
collective bargaining agreement or similar agreement or arrangement with employees or officers of any Seller Entity, (iv) grant
any increase in fees or other increases in compensation or other benefits to directors of any Seller Entity, (v) waive any stock
repurchase rights, or grant, accelerate, amend (except to the extent necessary to comply with Section 2.3(e)) or change the period
of exercisability of any Equity Rights or restricted stock, or authorize cash payments in exchange for any Equity Rights, (vi)
fund any rabbi trust or similar arrangement, (vii) terminate the employment or services of any officer or any employee whose annual
base compensation is greater than $75,000, other than for cause, (viii) hire any officer, employee, independent contractor or
consultant (who is a natural person) whose annual base compensation is greater than $100,000, or (ix) implement or announce any
employee layoff that would reasonably be expected to implicate the WARN Act;
(h)
enter into, amend or renew any employment or Independent Contractor Contract between any Seller Entity and any Person requiring
payments thereunder in excess of $75,000 in any 12-month period that the Seller Entity does not have the unconditional right to
terminate without Liability (other than Liability for services already rendered), at any time on or after the Effective Time;
(i)
except with respect to a Seller Benefit Plan that is intended to be tax-qualified in the opinion of counsel is necessary or advisable
to maintain the tax qualified status, (i) adopt or establish any plan, policy, program or arrangement that would be considered
a Seller Benefit Plan if such plan, policy, program or arrangement were in effect as of the date of this Agreement, or amend in
any material respect any existing Seller Benefit Plan, terminate or withdraw from, or amend, any Seller Benefit Plan, (ii) make
any distributions from such Seller Benefit Plans, except as required by the terms of such plans, or (iii) fund or in any other
way secure the payment of compensation or benefits under any Seller Benefit Plan;
(j)
except in each case as may be required to conform to changes in Tax Laws, regulatory accounting requirements or GAAP, as applicable,
make any change in any accounting principles, practices or methods or systems of internal accounting controls; or make or change
any material Tax election, Tax accounting method, taxable year or period; file any amended material Tax Return, stop maintaining
withholding certificates in respect of any person required to be maintained under the Internal Revenue Code or the Treasury Regulations,
agree to an extension or waiver of any statute of limitations with respect to the assessment or determination of Taxes; settle
or compromise any Tax liability of any Seller Entity; enter into any closing agreement with respect to any Tax; surrender any
right to claim a Tax refund; or claim any other Tax relief or Tax benefit under a COVID-19 Relief Law;
(k)
commence any Litigation other than in the Ordinary Course, or settle, waive or release or agree or consent to the issuance of
any Order in connection with any Litigation (i) involving any Liability of any Seller Entity for money damages in excess of $50,000
in the aggregate or that would impose any restriction on the operations, business or Assets of any Seller Entity or the Surviving
Corporation or (ii) arising out of or relating to the transactions contemplated hereby;
(l)
(i) enter into, renew, extend, modify, amend or terminate any (A) Contract (1) with a term longer than one year or (2) that calls
for aggregate payments of $50,000 or more, (B) Seller Contract or any Contract which would be a Seller Contract if it were in
existence on the date hereof, (C) Contract referred to in Section 4.34 (or any other Contract with any broker or finder in connection
with the Merger or any other transaction contemplated by this Agreement), or (D) Contract, plan, arrangement or other transaction
of the type described in Section 4.35 or (ii) waive, release, compromise or assign any material rights or claims under any Contract
described in the foregoing clause (i);
(m)
(i) enter into any new line of business or change in any material respect its lending, investment, risk and asset-liability management,
interest rate, fee pricing or other material banking or operating policies (including the offering of new products or any change
in the maximum ratio or similar limits as a percentage of its capital exposure applicable with respect to its loan portfolio or
any segment thereof) or (ii) change its policies and practices with respect to underwriting, pricing, originating, acquiring,
selling, servicing or buying or selling rights to service Loans except as required by rules or policies imposed by a Regulatory
Authority;
(n)
make, or commit to make, any capital expenditures in excess of $50,000 individually or $100,000 in the aggregate;
(o)
except as required by applicable Regulatory Authorities, make any material changes in its policies and practices with respect
to insurance policies including materially reduce the amount of insurance coverage currently in place or fail to renew or replace
any existing insurance policies;
(p)
materially change or restructure its investment securities portfolios, its investment securities practice or policies, its hedging
practices or policies, or change its policies with respect to the classification or reporting of such portfolios or invest in
any mortgage-backed or mortgage related securities which would be considered “high-risk” securities under applicable
regulatory pronouncements or change its interest rate exposure through purchases, sales or otherwise, or the manner in which its
investment securities portfolios are classified or reported;
(q)
alter materially its interest rate or fee pricing policies with respect to depository accounts of any Seller Subsidiary or waive
any material fees with respect thereto;
(r)
take any action, or knowingly fail to take any action, which action or failure to act prevents or impedes, or could reasonably
be expected to prevent or impede, the Merger from qualifying as a “reorganization” within the meaning of Section 368(a)
of the Internal Revenue Code;
(s)
make or acquire any Loan or issue a commitment (including a letter of credit) or renew or extend an existing commitment for any
Loan, or amend or modify in any material respect any Loan (including in any manner that would result in any additional extension
of credit, principal forgiveness, or effect any uncompensated release of collateral, i.e., at a value below the fair market
value thereof as determined by Seller Bank), except (i) secured Loans or commitments for Loans with a principal balance less than
$1,500,000 in compliance with Seller Bank’s underwriting policy and related Loan policies in effect as of the date of this
Agreement consistent with past practices, including pursuant to an exception to such underwriting policy and related Loan policies
that is reasonable in light of the underwriting of the borrower for such Loan or commitment (provided that this exception shall
not permit any Seller Entity to acquire such Loans), (ii) unsecured Loans or commitments for Loans with a principal balance equal
to or less than $250,000 in compliance with Seller Bank’s underwriting policy and related Loan policies in effect as of
the date of this Agreement consistent with past practices, including pursuant to an exception to such underwriting policy and
related Loan policies that is reasonable in light of the underwriting of the borrower for such Loan or commitment (provided that
this exception shall not permit any Seller Entity to acquire such Loans), and (iii) amendments or modifications of any existing
Loan in full compliance with Seller Bank’s underwriting policy and related Loan policies in effect as of the date of this
Agreement consistent with past practices without utilization of any of the exceptions provided in such underwriting policy and
related loan policies (provided that such Loan is not a Criticized Loan) (for purposes of requesting consent under this Section
6.2(s), Seller and Buyer shall follow the procedures set forth in Section 6.2(s) of Buyer’s Disclosure Memorandum);
(t)
other than in the Ordinary Course, repurchase, or provide indemnification relating to, Loans in the aggregate in excess of $100,000;
(u)
cancel, compromise, waive, or release any material indebtedness owed to any Person or any rights or claims held by any Person,
except for (i) sales of Loans and sales of investment securities, in each case in the Ordinary Course or (ii) as expressly required
by the terms of any Contracts in force at the date of the Agreement;
(v)
permit the commencement of any construction of new structures or facilities upon, or purchase or lease any real property in respect
of any branch or other facility, or make any application to open, relocate or close any branch or other facility;
(w)
enter into any securitizations of any Loans or create any special purpose funding or variable interest entity other than on behalf
of clients;
(x)
foreclose upon or take a deed or title to any commercial real estate (excluding real estate used solely for agricultural production)
without first conducting a Phase I environmental assessment (except where such an assessment has been conducted in the preceding
12 months) of the property or foreclose upon any commercial real estate if such environmental assessment indicates the presence
of Hazardous Material;
(y)
notwithstanding any other provision hereof, take any action that is intended or which could reasonably be expected to (i) impede,
adversely affect or delay consummation of the transactions contemplated by this Agreement or the receipt of any approvals of any
Regulatory Authority or third party referenced in Section 7.4(a), (ii) result in any of the conditions set forth in ARTICLE 8
not being satisfied, or (iii) impair its ability to perform its obligations under this Agreement or to consummate the transactions
contemplated hereby, except as required by applicable Law; or
(z)
agree to take, make any commitment to take, or adopt any resolutions of Seller’s board of directors in support of, any of
the actions prohibited by this Section 6.2.
6.3. Covenants
of Buyer.
From
the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, unless the prior written
consent of Seller shall have been obtained (which consent shall not be unreasonably withheld, delayed, or conditioned), and except
as expressly contemplated herein or as set forth in Section 6.3 of Buyer’s Disclosure Memorandum, Buyer covenants and agrees
that it will not do or agree or commit to do, or permit any of its Subsidiaries to do or agree or commit to do, any of the following:
(a)
amend the articles of incorporation, bylaws or other governing instruments of Buyer or any Significant Subsidiaries (as defined
in Regulation S-X promulgated by the SEC) in a manner that would affect Seller or the holders of Seller Common Stock adversely
relative to other holders of Buyer Common Stock;
(b)
take any action, or knowingly fail to take any action, which action or failure to act prevents or impedes, or could reasonably
be expected to prevent or impede, the Merger from qualifying as a “reorganization” within the meaning of Section 368(a)
of the Internal Revenue Code;
(c)
take any action that is intended or which could reasonably be expected to (i) impede, adversely affect or materially delay consummation
of the transactions contemplated by this Agreement or the receipt of any approvals of any Regulatory Authority or third party
referenced in Section 7.4(a), (ii) result in any of the conditions set forth in ARTICLE 8 not being satisfied, or (iii) impair
its ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby, except as required
by applicable Law; or
(d)
agree to take, make any commitment to take, or adopt any resolutions of Buyer’s board of directors in support of, any of
the actions prohibited by this Section 6.3.
6.4. Reports.
Each
Party and its Subsidiaries shall file all reports, including Call Reports, required to be filed by it with Regulatory Authorities
between the date of this Agreement and the Effective Time and shall deliver to the other Party copies of all such reports promptly
after the same are filed. If financial statements are contained in any such reports filed with the SEC and with respect to the
financial statements in the Call Reports, such financial statements will fairly present the consolidated financial position of
the entity filing such statements as of the dates indicated and the consolidated results of operations, changes in shareholders’
equity, and cash flows for the periods then ended in accordance with GAAP (subject in the case of interim financial statements
to normal recurring year-end adjustments that are not material) or applicable regulatory accounting principles (with respect to
the financial statements contained in the Call Reports) consistently applied, except as may be otherwise indicated in the notes
thereto and except for the omission of footnotes. Notwithstanding the above, neither Party shall be obligated to disclose to the
other Party any reports to the extent such reports contain confidential supervisory information or other information the disclosure
of which would be prohibited by applicable Law.
ARTICLE
7
ADDITIONAL AGREEMENTS
7.1. Registration
Statement; Proxy Statement/Prospectus; Shareholder Approval.
(a)
Buyer and Seller shall promptly prepare and file with the SEC a proxy statement/prospectus in definitive form (including any amendments
thereto, the “Proxy Statement/Prospectus”) and Buyer shall prepare and file with the SEC the Registration Statement
(including the Proxy Statement/Prospectus constituting a part thereof and all related documents) as promptly as reasonably practicable
after the date of this Agreement, subject to full cooperation of both Parties and their respective advisors and accountants. Buyer
and Seller agree to cooperate, and to cause their respective Subsidiaries to cooperate, with the other Party and its counsel and
its accountants in the preparation of the Registration Statement and the Proxy Statement/Prospectus. Each of Buyer and Seller
agrees to use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act
as promptly as reasonably practicable after filing thereof, and Seller shall thereafter mail or deliver the Proxy Statement/Prospectus
to its shareholders promptly following the date of effectiveness of the Registration Statement. Buyer also agrees to use its reasonable
best efforts to obtain all necessary state securities law or “Blue Sky” permits and approvals required to carry out
the transactions contemplated by this Agreement, and Seller shall furnish all information concerning Seller and the holders of
Seller Common Stock as may be reasonably requested in connection with any such action.
(b)
Seller shall duly call, give notice of, establish a record date for, convene and hold a shareholders’ meeting (“Seller’s
Shareholders’ Meeting”), to be held as promptly as reasonably practicable after the Registration Statement is
declared effective by the SEC, for the purpose of obtaining the Seller Shareholder Approval and, if so desired and mutually agreed,
such other matters of the type customarily brought before an annual or special meeting of shareholders. Seller agrees that its
obligations pursuant to this Section 7.1(b) shall not be affected by the commencement, proposal, disclosure, or communication
to Seller of any Acquisition Proposal.
(c)
Seller shall, subject to Section 7.2(c), (i) through its board of directors unanimously recommend to its shareholders the approval
of this Agreement and the transactions contemplated hereby (the “Seller Recommendation”), (ii) include such
Seller Recommendation in the Proxy Statement/Prospectus and (iii) use its reasonable best efforts to obtain the Seller Shareholder
Approval. If requested by Buyer, Seller shall retain a proxy solicitor reasonably acceptable to, and on terms reasonably acceptable
to, Buyer in connection with obtaining the Seller Shareholder Approval. Subject to Section 7.2(c), neither the board of directors
of Seller nor any committee thereof shall (A) withhold, withdraw, qualify or modify in a manner adverse to Buyer the Seller Recommendation,
(B) fail to make the Seller Recommendation or otherwise submit this Agreement
to Seller’s shareholders without recommendation,
(C) adopt, approve, agree to, accept, recommend or endorse an Acquisition Proposal, (D) fail to publicly and without qualification
(1) recommend against any Acquisition Proposal or (2) reaffirm the Seller Recommendation within ten Business Days (or such fewer
number of days as remains prior to Seller’s Shareholders’ Meeting) after an Acquisition Proposal is made public or
any request by Buyer to do so, (E) subject to Section 7.2(f), take any action, or make any public statement, filing or release
inconsistent with the Seller Recommendation, or (F) publicly propose to do any of the foregoing (any of the foregoing being a
“Change in the Seller Recommendation”).
(d)
Seller shall adjourn or postpone Seller’s Shareholders’ Meeting, if, as of the time for which such meeting is originally
scheduled, there are insufficient shares of Seller Common Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of such meeting. Seller shall also adjourn or postpone Seller’s Shareholders’ Meeting
if, as of the time for which Seller’s Shareholders’ Meeting is scheduled, Seller has not received proxies representing
a sufficient number of shares necessary to obtain the Seller Shareholder Approval. Notwithstanding anything to the contrary herein,
unless this Agreement has been terminated in accordance with Section 9.1, Seller’s Shareholders’ Meeting shall be
convened and this Agreement shall be submitted to the shareholders of Seller at Seller’s Shareholders’ Meeting, for
the purpose of voting on the approval of this Agreement and the other matters contemplated hereby, and nothing contained herein
shall be deemed to relieve Seller of such obligation. Seller shall only be required to adjourn or postpone Seller’s Shareholders’
Meeting two times pursuant to the first two sentences of this Section 7.1(d).
7.2.
Acquisition Proposals.
(a)
No Seller Entity shall, and it shall cause its Representatives not to, directly or indirectly, (i) solicit, initiate, encourage
(including by providing information or assistance), facilitate or induce any Acquisition Proposal, (ii) engage or participate
in any discussions or negotiations regarding, or furnish or cause to be furnished to any Person any confidential or nonpublic
information or data with respect to, or take any other action to facilitate any inquiries or the making of any offer or proposal
that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal (iii) adopt, approve, agree to, accept, endorse
or recommend any Acquisition Proposal, (iv) approve, agree to, accept, endorse or recommend, or propose to approve, agree to,
accept, endorse or recommend any Acquisition Agreement contemplating or otherwise relating to any Acquisition Transaction, or
(v) except as otherwise expressly provided in this Section 7.2, otherwise cooperate in any way with, or assist or participate
in, or facilitate or encourage any effort or attempt by any Person to do or seek to do any of the foregoing. Without limiting
the foregoing, it is agreed that any violation of the restrictions set forth in this Section 7.2 by any Subsidiary or Representative
of Seller shall constitute a breach of this Section 7.2 by Seller. In addition to the foregoing, unless this Agreement has been
terminated in accordance with Section 9.1, Seller shall not submit to the vote of its shareholders any Acquisition Proposal other
than the Merger.
(b)
Promptly (but in no event more than 48 hours) following receipt of any Acquisition Proposal or any request for nonpublic information
or any inquiry that could reasonably be expected to lead to any Acquisition Proposal, Seller shall advise Buyer in writing of
the receipt of such Acquisition Proposal, request or inquiry, and the terms and conditions of such Acquisition Proposal, request
or inquiry (including, in each case, the identity of the Person making any such Acquisition Proposal, request or inquiry), and
Seller shall as promptly as practicable provide to Buyer (i) a copy of such Acquisition Proposal, request or inquiry, if in writing,
or (ii) a written summary of the material terms of such Acquisition Proposal, request or inquiry, if oral. Seller shall provide
Buyer as promptly as practicable (but in no event more than 48 hours) with notice setting forth all such information as is necessary
to keep Buyer informed on a reasonably current basis of all developments, discussions, negotiations and communications regarding
(including amendments or proposed amendments to) such Acquisition Proposal, request or inquiry.
(c)
Notwithstanding anything herein to the contrary, at any time prior to Seller’s Shareholders’ Meeting, the board of
directors of Seller may submit this Agreement to Seller’s shareholders without recommendation (although the resolution approving
this Agreement as of the date hereof may not be rescinded or amended), if (i) Seller has received a Superior Proposal (after giving
effect to the terms of any revised offer by Buyer pursuant to this Section 7.2(c)), and (ii) the board of directors of Seller
has determined in good faith, after consultation with its financial advisors and outside legal counsel, that it would be inconsistent
with the directors’ fiduciary duties under applicable Law to make or continue to make the Seller Recommendation; provided,
that the board of directors of Seller may not take the actions set forth in this Section 7.2(c) unless:
(i)
Seller has complied in all material respects with this Section 7.2;
(ii)
Seller has provided Buyer at least five Business Days prior written notice of its intention to take such action and the information
set forth under Section 7.2(b));
(iii)
during such five Business Day period, Seller has considered and negotiated, and has caused its financial advisors and outside
legal counsel to consider and negotiate, with Buyer in good faith (to the extent Buyer desires to so negotiate) regarding any
proposals, adjustments or modifications to the terms and conditions of this Agreement proposed by Buyer; and
(iv)
the board of directors of Seller has determined in good faith, after consultation with its financial advisors and outside legal
counsel and considering the results of such negotiations and giving effect to any proposals, amendments or modifications proposed
by Buyer prior to the close of business on the fifth Business Day of such five Business Day period, if any, that such Superior
Proposal remains a Superior Proposal and that it would nevertheless be inconsistent with the directors’ fiduciary duties
under applicable Law to make or continue to make the Seller Recommendation.
Any material
amendment to any Acquisition Proposal will be deemed to be a new Acquisition Proposal for purposes of this Section 7.2(c) and
will require a new determination and notice period as referred to in this Section 7.2(c).
(d)
Seller and Seller Subsidiaries shall, and Seller shall direct its Representatives to, (i) immediately cease and cause to be terminated
any and all existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any offer or
proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal, (ii) request the prompt return or
destruction of all confidential information previously furnished to any Person (other than Buyer, Buyer Bank and their Representatives)
that has made or indicated an intention to make an Acquisition Proposal, and (iii) except to the extent the board of directors
of Seller determines in good faith, after consultation with its outside legal counsel, that it would be inconsistent with the
directors’ fiduciary duties under applicable Law, not waive or amend any “standstill” provision or provisions
of similar effect to which it is a party or of which it is a beneficiary and shall strictly enforce any such provisions.
(e)
Nothing contained in this Agreement shall prevent Seller or its board of directors from complying with Rule 14d-9 and Rule 14e-2
under the Exchange Act or Item 1012(a) of Regulation M-A with respect to an Acquisition Proposal or from making any legally required
disclosure to the shareholders of Seller; provided, that such rules will in no way eliminate or modify the effect that any action
pursuant to such rules would otherwise have under this Agreement.
(f)
Notwithstanding anything to the contrary in Section 7.2(a), if Seller or any of its Representatives receives an unsolicited, bona
fide written Acquisition Proposal by any Person at any time prior to the Seller Shareholder Approval that did not result from
or arise in connection with a breach of Section 7.2(a), Seller and its Representatives may, prior to (but not after) the Seller’s
Shareholders’ Meeting, take the following actions if the board of directors of Seller (or any committee thereof) has (i)
determined, in its good faith judgment
(after consultation with Seller’s financial advisors and outside legal counsel),
that such Acquisition Proposal constitutes or would reasonably be expected to lead to a Superior Proposal and that the failure
to take such actions would be inconsistent with its fiduciary duties under applicable Law, and (ii) obtained from such Person
an executed confidentiality agreement containing terms at least as restrictive with respect to such Person as the terms of the
Confidentiality Agreement are in each provision with respect to Buyer (and such confidentiality agreement shall not provide such
Person with any exclusive right to negotiate with Seller): (A) furnish information to (but only if Seller shall have provided
such information to Buyer prior to furnishing it to any such Person), and (B) enter into discussions and negotiations with, such
Person and its Representatives with respect to such unsolicited, bona fide written Acquisition Proposal.
7.3.
Exchange Listing.
Buyer
shall use its reasonable best efforts to list, prior to the Effective Time, on Nasdaq, subject to official notice of issuance,
the shares of Buyer Common Stock to be issued to the holders of Seller Common Stock pursuant to this Agreement, and Buyer shall
give all notices and make all filings with Nasdaq required in connection with the transactions contemplated herein.
7.4. Consents
of Regulatory Authorities.
(a)
The Parties and their respective Subsidiaries shall cooperate with each other and use their respective reasonable best efforts
to prepare all documentation, to effect all applications, notices, petitions, and filings and to obtain all Permits and Consents
of all third parties and Regulatory Authorities that are necessary or advisable to consummate the transactions contemplated by
this Agreement (including the Merger), and to comply with the terms and conditions of all such Permits and Consents. Each of the
Parties shall use its respective reasonable best efforts to resolve objections, if any, which may be asserted with respect to
this Agreement or the transactions contemplated hereby by any Regulatory Authority or under any applicable Law or Order. Notwithstanding
the foregoing, in no event shall any Buyer Entities be required, and the Seller Entities shall not be permitted (without Buyer’s
prior written consent in its sole discretion), to take any action, or commit to take any action, or to accept any restriction
or condition, involving the Buyer Entities or the Seller Entities, which is materially burdensome on Buyer’s or Buyer Bank’s
business or on the business of Seller or Seller Bank, in each case following the Closing, or which would likely reduce the economic
benefits of the transactions contemplated by this Agreement to Buyer to such a degree that Buyer would not have entered into this
Agreement had such condition or restriction been known to it at the date hereof (any such condition or restriction, a “Burdensome
Condition”).
(b)
Each of the Parties shall have the right to review in advance, and to the extent practicable each will consult with the other,
in each case subject to applicable Laws relating to the exchange of information, with respect to, all material written information
submitted to any third party or Regulatory Authority in connection with the transactions contemplated by this Agreement; provided,
that Seller shall not have the right to review portions of material filed by Buyer or Buyer Bank with a Regulatory Authority that
contain competitively sensitive business or other proprietary information or confidential supervisory information, in which case,
to the extent reasonably practicable, the Parties will make appropriate substitute disclosure arrangements. In exercising the
foregoing rights, each of the Parties agrees to act reasonably and as promptly as practicable. Each Party agrees that it will
consult with the other Party with respect to the obtaining of all Permits and Consents of third parties and Regulatory Authorities
necessary or advisable to consummate the transactions contemplated by this Agreement and each Party will keep the other Party
apprised of the status of material matters relating to completion of the transactions contemplated hereby, including advising
the other Party upon receiving any communication from a Regulatory Authority the Consent of which is required for the consummation
of the Merger and the other transactions contemplated by this Agreement that causes such Party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that the receipt of such
Requisite Regulatory Approval
may be materially delayed. Except for non-material communications relating to a regulatory application, approval process, status,
or similar matters, to the extent reasonably practicable, each Party shall consult with the other in advance of any meeting or
conference with any Regulatory Authority in connection with the transactions contemplated by this Agreement.
(c)
Each Party agrees, upon request, subject to applicable Laws, to promptly furnish the other Party with all information concerning
itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Registration Statement, Proxy/Prospectus or any other statement, filing, notice or application made by
or on behalf of Buyer, Seller or any of their respective Subsidiaries to any third party and/or Regulatory Authority in connection
with the transactions contemplated by this Agreement.
7.5.
Access to Information; Confidentiality and Notification of Certain Matters.
(a)
Each Party shall promptly advise the other Party of any fact, change, event, effect, condition, occurrence, development or circumstance
(i) that has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on
the disclosing Party or (ii) which the disclosing Party believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties, covenants or agreements contained herein or that reasonably could be
expected to give rise, individually or in the aggregate, to the failure of a condition in ARTICLE 8; provided, that any failure
to give notice in accordance with the foregoing with respect to any breach shall not be deemed to constitute a violation of this
Section 7.5(a) or the failure of any condition set forth in Section 8.1, 8.2, or 8.3 to be satisfied, or otherwise constitute
a breach of this Agreement by the disclosing Party, in each case unless the underlying breach would independently result in a
failure of the conditions set forth in Section 8.1, 8.2, or 8.3 to be satisfied; and provided, further, that the delivery of any
notice pursuant to this Section 7.5(a) shall not cure any breach of, or noncompliance with, any other provision of this Agreement
or limit the remedies available to the other Party.
(b)
Prior to the Effective Time, Seller shall permit the Representatives of Buyer to make or cause to be made such investigation of
the business, Assets, Liabilities, information technology systems, Contracts, Books and Records, and personnel and such other
information of it and its Subsidiaries and of their respective financial and legal conditions as Buyer reasonably requests and
furnish to Buyer promptly all other information concerning its business, Assets, Liabilities, information technology systems,
Contracts, Books and Records, and personnel and such other information as Buyer may reasonably request. No investigation by Buyer
shall affect or be deemed to modify or waive the representations, warranties, covenants and agreements of Seller in this Agreement,
or the conditions of such Party’s obligation to consummate the transactions contemplated by this Agreement. Neither Buyer
nor Seller nor any of their respective Subsidiaries shall be required to provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights of Buyer’s or Seller’s, as the case may be, customers,
jeopardize the attorney-client privilege of the institution in possession or control of such information (after giving due consideration
to the existence of any common interest, joint defense or similar agreement between the Parties) or contravene any Law, fiduciary
duty or binding Contract entered into prior to the date of this Agreement or to the extent that Seller may impose any reasonable
restrictions with respect to in-person access in light of the Pandemic or the Pandemic Measures, including the health and safety
of its employees. The Parties will make appropriate substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply. Without limiting the foregoing, and for the avoidance of doubt, subject to applicable Law, Seller
shall permit the Representatives of Buyer and Buyer Bank to observe meetings of committees or similar groups established to review
and approve potential Loans or similar matters.
(c)
Each Party shall, and shall cause its Subsidiaries and Representatives to, hold and use any information obtained in connection
with this Agreement and in pursuit of the transactions contemplated hereby in accordance with the terms of the Confidentiality
and Nondisclosure Agreement, dated July 12, 2021, between Buyer and Seller (the “Confidentiality Agreement”).
(d)
Prior to the Effective Time, Seller shall promptly notify Buyer of any material change in the ordinary course of its or its Subsidiaries’
business or in the operation of its or its Subsidiaries’ properties and, to the extent permitted by applicable Law, of any
material Litigation (or communications indicating that the same may be contemplated), or the institution or the threat of a material
Litigation involving Seller or any other Seller Entity.
7.6.
Press Releases.
The
Parties shall consult with each other before issuing any press release or other public disclosure or communication (including
communications to employees, agents and contractors) related to this Agreement or the transactions contemplated hereby and shall
not issue such press release or other public disclosure without the prior written consent of the other Party (which consent shall
not be unreasonably withheld, delayed or conditioned); provided, that nothing in this Section 7.6 shall be deemed to prohibit
any Party from making any press release or other public disclosure as may upon the advice of the Party’s outside counsel
be required by Law or the rules or regulations of any United States or non-United States securities exchange, in which case the
Party required to make the release or disclosure shall use its reasonable best efforts to allow the other Party reasonable time
to comment on such release or disclosure in advance of the issuance thereof. The Parties have agreed upon the form of a joint
press release announcing the execution of this Agreement.
7.7. Tax
Treatment.
(a)
Each of the Parties intends, and undertakes and agrees to use its respective reasonable best efforts to cause, the Merger, and
to take no action which would cause the Merger not, to qualify as a “reorganization” within the meaning of Section
368(a) of the Internal Revenue Code for federal income Tax purposes, and none of the Parties shall take any action that would
cause the Merger to not so qualify. The Parties shall cooperate and use their reasonable best efforts in order to obtain the Tax
Opinion. The Parties adopt this Agreement as a “plan of reorganization” within the meaning of Section 368(a) and Treasury
Regulations Sections 1.368-2(g) and 1.368-3(a) for purposes of Sections 354, 356, and 361 of the Internal Revenue Code (and any
comparable provision of state or local Law) for federal income tax purposes (and applicable state and local income tax purposes).
(b)
Each of the Parties shall use its respective reasonable best efforts to cause their appropriate officers to execute and deliver
to Covington certificates containing appropriate representations and covenants, reasonably satisfactory in form and substance
to Covington, at such time or times as may be reasonably requested by Covington, including as of the effective date of the Proxy
Statement/Prospectus and the Closing Date, in connection with such counsel’s deliveries of opinions with respect to the
Tax treatment of the Merger.
(c)
Unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Internal Revenue
Code, each Party shall report the Merger as a “reorganization” within the meaning of Section 368(a) of the Internal
Revenue Code (and any comparable provision of applicable Law) and shall not take any inconsistent position therewith in any Tax
Return.
(d)
Prior to Closing, Seller shall (i) deliver to Buyer and mail to the IRS in accordance with Treasury Regulation Section 1.897-2(h)
(1) a statement, in form and substance satisfactory to Buyer, certifying that every Seller Entity is not, and has not been during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Internal Revenue Code, a “United States real property
holding company” within the meaning of Section 897(c)(2) of the Internal Revenue Code, which statement shall satisfy the
requirements of Treasury Regulations Sections 1.897-2(h) and 1.1445-2(c)(3), together with (2) a notice prepared and executed
in accordance with Treasury Regulations Section 1.897-2(h) to the IRS; and (ii) together therewith, furnish to Buyer proof of
mailing the items described in subclause (i).
7.8.
Employee Benefits and Contracts.
(a)
For a period of one year following the Effective Time, except as contemplated by this Agreement, any Buyer Entity shall provide
generally to employees who are actively employed by a Seller Entity on the Closing Date (“Covered Employees”)
while employed by such Buyer Entity following the Closing Date employee benefits under Buyer Benefit Plans, on terms and conditions
which are, in the aggregate, substantially comparable to those provided by Buyer Entities to their similarly situated employees;
provided, that in no event shall any Covered Employee be eligible to participate in any closed or frozen plan of any Buyer Entity.
Until such time as Buyer shall cause the Covered Employees to participate in the applicable Buyer Benefit Plans, the continued
participation of the Covered Employees in the Seller Benefit Plans shall be deemed to satisfy the foregoing provisions of this
clause (it being understood that participation in Buyer Benefit Plans may commence at different times with respect to each of
Buyer Benefit Plans). For purposes of determining eligibility to participate and vesting under Buyer Benefit Plans, and for purposes
of determining a Covered Employee’s entitlement to paid time off under the applicable Buyer Entity’s paid time off
program, the service of the Covered Employees with a Seller Entity prior to the Effective Time shall be treated as service with
a Buyer Entity participating in such Buyer Benefit Plans, to the same extent that such service was formally recognized by the
Seller Entities for purposes of a similar benefit plan; provided, that such recognition of service shall not (i) operate to duplicate
any benefits of a Covered Employee with respect to the same period of service or (ii) apply for purposes of any plan, program
or arrangement (x) under which similarly-situated employees of Buyer Entities do not receive credit for prior service, (y) that
is grandfathered or frozen, either with respect to level of benefits or participation, or (z) for purposes of retiree medical
benefits or level of benefits under a defined benefit pension plan.
(b)
Prior to the Closing Date, the Seller Entities shall take all necessary action (including without limitation the adoption of resolutions
and plan amendments and the delivery of any required notices) to terminate, effective as of no later than the day before the Closing
Date, any Seller Benefit Plan that is intended to constitute a tax-qualified defined contribution plan under Internal Revenue
Code Section 401(k) (a “401(k) Plan”). Seller shall provide Buyer with a copy of the resolutions, plan amendments,
notices and other documents prepared to effectuate the termination of the 401(k) Plans in advance and give Buyer a reasonable
opportunity to comment on such documents (which comments shall be considered in good faith), and prior to the Closing Date, Seller
shall provide Buyer with the final documentation evidencing that the 401(k) Plans have been terminated.
(c)
Upon request by Buyer in writing prior to the Closing Date, the Seller Entities shall cooperate in good faith with Buyer prior
to the Closing Date to amend, freeze, terminate or modify any other Seller Benefit Plan to the extent and in the manner determined
by Buyer effective upon the Closing Date (or at such different time mutually agreed to by the Parties) and consistent with applicable
Law. Seller shall provide Buyer with a copy of the resolutions, plan amendments, notices and other documents prepared to effectuate
the actions contemplated by this Section 7.8(c), as applicable, and give Seller a reasonable opportunity to comment on such documents
(which comments shall be considered in good faith), and prior to the Closing Date, Seller shall provide Buyer with the final documentation
evidencing that the actions contemplated herein have been effectuated.
(d)
Without limiting the generality of Section 10.4, nothing in this Section 7.8, expressed or implied, is intended to confer upon
any Person (other than the Parties or their respective successors), including any current or former employee, officer, director
or consultant of Seller or any of its Subsidiaries or Affiliates, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement. In no event shall the terms of this Agreement: (i) establish, amend, or modify any Seller Benefit Plan
or any “employee benefit plan” as defined in Section 3(3) of ERISA, or any other benefit plan, program, agreement
or arrangement maintained or sponsored by Buyer, Seller or any of their respective Affiliates; (ii) alter or limit the ability
of the Surviving Corporation, Buyer or any of their Subsidiaries or Affiliates to amend, modify or terminate any Seller Benefit
Plan, employment agreement or any other benefit or employment plan, program, agreement or arrangement after
the Closing Date;
or (iii) confer upon any current or former employee, officer, director or consultant of Seller or any of its Subsidiaries or Affiliates,
any right to employment or continued employment or continued service with Buyer or any Buyer Subsidiaries, the Surviving Corporation
or the Seller Entities, or constitute or create an employment agreement with any employee, or interfere with or restrict in any
way the rights of the Surviving Corporation, Seller, Buyer or any Subsidiary or Affiliate thereof to discharge or terminate the
services of any employee, officer, director or consultant of Seller or any of its Subsidiaries or Affiliates at any time for any
reason whatsoever, with or without cause.
(e)
On the Closing Date, Seller shall provide Buyer with a list of employees who have suffered an “employment loss” (as
defined in the WARN Act) in the 90 days preceding the Closing Date or had a reduction in hours of a least 50% in the 180 days
preceding the Closing Date, each identified by date of employment loss or reduction in hours, employing entity and facility location.
7.9. Indemnification.
(a)
For a period of six years after the Effective Time, the Surviving Corporation shall indemnify, defend and hold harmless the present
and former directors and officers of the Seller Entities (each, an “Indemnified Party”), against all Liabilities
incurred in connection with any actual or threatened Litigation arising out of or pertaining to, the fact that such person is
or was a director or officer of the Seller Entities or, at a Seller Entity’s request, of another corporation, partnership,
joint venture, trust or other enterprise and pertaining to matters, acts or omissions existing or occurring at or prior to the
Effective Time (including matters, acts or omissions occurring in connection with the approval of this Agreement and the transactions
contemplated by this Agreement) (each a “Claim”), whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent permitted under such Seller Entity’s certificate of formation and bylaws (or other applicable
governing documents) as in effect as of the date of this Agreement (or, in the case of Seller’s bylaws, as in effect as
of the Closing Date) (and subject to applicable Law), including provisions relating to advances of expenses incurred in the defense
of any such Litigation; provided, that the Indemnified Party to whom expenses are advanced provides a written undertaking to repay
such advances if it is ultimately determined that such Indemnified Party is not entitled to indemnification.
(b)
The Surviving Corporation shall use its reasonable best efforts (and Seller shall cooperate prior to the Effective Time in these
efforts) to maintain in effect for a period of six years after the Effective Time Seller’s existing directors’ and
officers’ liability insurance policy (provided that the Surviving Corporation may substitute therefor (i) policies of at
least the same coverage and amounts containing terms and conditions which are substantially no less advantageous to the insured
or (ii) with the consent of Seller given prior to the Effective Time, any other policy) with respect to claims arising from facts
or events which occurred prior to the Effective Time; provided, that the Surviving Corporation shall not be obligated to make
aggregate premium payments for such six-year period in respect of such policy (or coverage replacing such policy) which exceed,
for the portion related to Seller’s directors and officers, 200% of the annual premium payments currently paid on Seller’s
current policy in effect as of the date of this Agreement (the “Maximum Amount”). If the amount of the premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum Amount, the Surviving Corporation shall use its reasonable
best efforts to maintain the most advantageous policies of directors’ and officers’ liability insurance obtainable
for a premium equal to the Maximum Amount. In lieu of the foregoing, Buyer, or Seller in consultation with Buyer, may obtain on
or prior to the Effective Time, a six-year “tail” prepaid policy providing equivalent coverage to that described in
this Section 7.9(b) at a premium not to exceed the Maximum Amount. If the premium necessary to purchase such “tail”
prepaid policy exceeds the Maximum Amount, Buyer or Seller in consultation with Buyer may purchase the most advantageous “tail”
prepaid policy obtainable for a premium equal to the Maximum Amount, and in each case, Buyer and the Surviving Corporation shall
have no further obligations under this Section 7.9(b) other than to maintain such “tail” prepaid policy.
(c)
Any Indemnified Party wishing to claim indemnification under Section 7.9(a), upon learning of any such Claim, shall promptly notify
the Surviving Corporation thereof; provided that the failure to so notify shall not relieve the Surviving Corporation of its obligations
hereunder except to the extent that it is materially prejudiced by such failure. In the event of any such Claim (whether arising
before or after the Effective Time): (i) Buyer or the Surviving Corporation shall have the right to assume the defense thereof
and Buyer and the Surviving Corporation shall not be liable to such Indemnified Parties for any legal expenses of other counsel
or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if
Buyer or the Surviving Corporation elects not to assume such defense or independent legal counsel for the Indemnified Parties
advises that there are substantive issues which raise conflicts of interest between Buyer or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and Buyer or the Surviving Corporation shall
pay all reasonable fees and expenses of such counsel for the Indemnified Parties as required under, and in accordance with, Seller’s
certificate of formation and bylaws as in effect as of the date of this Agreement (or, in the case of Seller’s bylaws, as
in effect as of the Closing Date) (subject to applicable Law); provided, that Buyer or the Surviving Corporation shall be obligated
pursuant to this Section 7.9(c) to pay for only one firm of counsel for all Indemnified Parties; (ii) the Indemnified Parties
will cooperate in the defense of any such Claim; and (iii) Buyer and the Surviving Corporation shall not be liable for any settlement
effected without its prior written consent; and provided, further, that Buyer and the Surviving Corporation shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall determine, and such determination
shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by
applicable Law or not required by Seller’s certificate of formation and bylaws as in effect as of the date of this Agreement
(or, in the case of Seller’s bylaws, as in effect as of the Closing Date) (subject to applicable Law).
(d)
If the Surviving Corporation or any successors or assigns shall consolidate with or merge into any other Person and shall not
be the continuing or surviving Person of such consolidation or merger or if the Surviving Corporation (or any successors or assigns)
shall transfer all or substantially all of its Assets to any Person, then and in each case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation shall assume the obligations set forth in this Section 7.9.
(e)
The provisions of this Section 7.9 are intended to be for the benefit of and shall be enforceable by each Indemnified Party and
their respective heirs and Representatives.
(f)
Notwithstanding anything in this Section 7.9 to the contrary, no indemnification payments will be made to an Indemnified Party
with respect to an administrative proceeding or civil action initiated by any federal banking agency unless all of the following
conditions are met: (i) the Buyer’s board of directors determines in writing that the Indemnified Party acted in good faith
and in the best interests of Seller or Seller Bank; (ii) the Buyer’s board of directors determines that the payment will
not materially affect the Buyer’s or Buyer Bank’s safety and soundness; (iii) the payment does not fall within the
definition of a prohibited indemnification payment under 12 C.F.R. Part 359; and (iv) the Indemnified Party agrees in writing
to reimburse Buyer, to the extent not covered by permissible insurance, for payments made in the event that the administrative
or civil action instituted by a banking Regulatory Authority results in a final order or settlement in which the Indemnified Party
is assessed a civil money penalty, is prohibited from banking, or is required to cease an action or perform an affirmative action.
7.10.
Seller Operating Functions.
Seller
and Seller Bank shall cooperate with Buyer and Buyer Bank in connection with planning for the efficient and orderly combination
of the Parties and the operation of the Surviving Corporation and the Surviving Entity, and in preparing for the consolidation
of appropriate operating functions to be effective at the Effective Time or such later date as Buyer may decide. Each Party shall
cooperate with the other Party in preparing to execute after the Effective Time conversion or consolidation of systems and business
operations
generally (including by entering into customary confidentiality, non-disclosure and similar agreements with such service
providers or the other Party). Prior to Effective Time, each Party shall exercise, consistent with terms and conditions of this
Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
7.11. Shareholder
Litigation.
Each
of Seller and Buyer shall promptly notify each other in writing of any action, arbitration, audit, hearing, investigation, litigation,
suit, subpoena or summons issued, commenced, brought, conducted or heard by or before, or otherwise involving, any Regulatory
Authority or arbitrator pending or, to the Knowledge of Seller or Buyer, as applicable, threatened against Seller, Buyer or any
of their respective Subsidiaries or Representatives that (a) questions or would reasonably be expected to question the validity
of this Agreement or the other agreements contemplated hereby or thereby or any actions taken or to be taken by Seller, Buyer
or their respective Subsidiaries with respect hereto or thereto or (b) seeks to enjoin or otherwise restrain the transactions
contemplated hereby or thereby. Seller shall give Buyer prompt notice of any shareholder litigation against Seller or its directors
or officers relating to the transactions contemplated by this Agreement and shall give Buyer every opportunity to participate
in the defense or settlement of such litigation, provided that no such settlement shall be agreed to by any Seller Entity without
Buyer’s prior written consent (such consent not to be unreasonably withheld, delayed or conditioned).
7.12. Legal
Conditions to Merger; Additional Agreements.
Subject
to Sections 7.1 and 7.4 of this Agreement, each of Seller and Buyer shall, and shall cause its Subsidiaries to, use their reasonable
best efforts (a) to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal and
regulatory requirements that may be imposed on such Party or its Subsidiaries with respect to the Merger and Bank Merger and,
subject to the conditions set forth in ARTICLE 8 hereof, to consummate the transactions contemplated by this Agreement and (b)
to obtain (and to cooperate with the other Party to obtain) any Permit or Consent by, any Regulatory Authority and any other third
party that is required to be obtained by Seller or Buyer or any of their respective Subsidiaries in connection with, or to effect,
the Merger, the Bank Merger, and the other transactions contemplated by this Agreement. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of this Agreement (including, any merger between a
Subsidiary of Buyer, on the one hand, and a Subsidiary of Seller, on the other hand) or to vest the Surviving Corporation and
the Surviving Entity with full title to all Assets, rights, Consents, Permits, immunities and franchises of any of the Parties
to the Merger and Bank Merger, the proper officers and directors of each Party and their respective Subsidiaries shall take all
such necessary action as may be reasonably requested by Buyer.
7.13. Closing
Financial Statements.
At
least eight Business Days prior to the Effective Time, Seller shall provide Buyer with Seller’s consolidated financial statements
presenting the financial condition of Seller and its Subsidiaries as of the close of business on the last day of the last month
ended prior to the Effective Time and Seller’s consolidated results of operations, cash flows, and shareholders’ equity
for the period from January 1, 2021, through the close of business on the last day of the last month ended prior to the Effective
Time (the “Closing Financial Statements”); provided, that if the Effective Time occurs on or before the 15th
day of the month, Seller shall have provided consolidated financial statements as of and through the second month preceding the
Effective Time. Such Closing Financial Statements shall have been prepared in accordance with GAAP and regulatory accounting principles
and other applicable legal and accounting requirements, and reflect all period-end accruals and other adjustments, except that
such Closing Financial Statements may omit the footnote disclosure required by GAAP. Such Closing Financial Statements shall be
accompanied by, as of the date of such Closing Financial Statements, (a) accruals or estimates for all fees, costs and expenses
incurred or expected to be incurred (whether or not doing
so is in accordance with GAAP) in connection (directly or indirectly)
with the transactions contemplated by this Agreement, (b) the capital ratios set forth in Section 8.2(f), (c) the asset quality
metrics set forth in Section 8.2(d), and (d) a certificate of Seller’s chief financial officer, dated as of the date of
such delivery of the Closing Financial Statements, to the effect that such financial statements meet the requirements of this
Section 7.13 and continue to reflect accurately, as of the date of such certificate, the consolidated financial condition, results
of operations, cash flows and shareholders’ equity of Seller in all material respects (which certification shall be reaffirmed
in the certificates required to be delivered pursuant to Section 8.2(c)).
7.14.
Dividends.
After
the date of this Agreement, each of Buyer and Seller shall coordinate with the other regarding the declaration of any dividends
in respect of Buyer Common Stock and (to the extent permitted by this Agreement) Seller Common Stock and the record dates and
payment dates relating thereto, it being the intention of the Parties that, Holders of Seller Common Stock shall not receive two
or more dividends, or fail to receive one dividend, attributable to any particular quarter with respect to their shares of Seller
Common Stock and any shares of Buyer Common Stock any such Holder receives in exchange therefor in the Merger.
7.15. Change
of Method.
Buyer
may at any time prior to the Effective Time change the method or structure of effecting the combination of Seller and Buyer (including
by providing for the merger of Seller with a wholly owned Subsidiary of Buyer) if and to the extent requested by Buyer, and Seller
agrees to enter into such amendments to this Agreement as Buyer may reasonably request in order to give effect to such restructuring;
provided, that no such change or amendment shall (i) alter or change the amount or kind of the Merger Consideration provided for
in this Agreement, (ii) adversely affect the Tax treatment of the Merger with respect to Seller’s shareholders, or (iii)
materially delay or impede the consummation of the transactions contemplated by this Agreement.
7.16. Restructuring
Efforts.
If
Seller shall have failed to obtain the Seller Shareholder Approval at the duly convened Seller’s Shareholders’ Meeting,
or any adjournment or postponement thereof, each of the Parties shall in good faith use its reasonable best efforts to negotiate
a restructuring of the transaction provided for herein (it being understood that no Party shall have any obligation to alter or
change any material terms, including the amount or kind of the Merger Consideration, in a manner adverse to such Party or its
shareholders or adversely affect the Tax treatment of the Merger with respect to Seller’s shareholders) and/or resubmit
this Agreement or the transactions contemplated hereby (or as restructured pursuant to this Section 7.16) to Seller’s shareholders
for approval; provided that the Parties shall have no obligations under this Section 7.16 if Seller has received a Superior Proposal
without breaching this Agreement.
7.17.
Takeover Statutes.
Neither
Buyer or Seller or their respective board of directors shall take any action that would cause any Takeover Statute to become applicable
to this Agreement, the Merger, or any of the other transactions contemplated hereby, and each shall take all necessary steps to
exempt (or ensure the continued exemption of) the Merger and the other transactions contemplated hereby from any applicable Takeover
Statute now or hereafter in effect. If any Takeover Statute may become, or may purport to be, applicable to the transactions contemplated
hereby, each of Buyer and Seller and the members of their respective board of directors will grant such approvals and take such
actions as are necessary so that the transactions contemplated by this Agreement may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of any Takeover Statute on any of the
transactions contemplated by this Agreement, including, if necessary, challenging the validity or applicability of any such Takeover
Statute.
7.18. Exemption
from Liability under Section 16(b).
Seller
and Buyer agree that, in order to most effectively compensate and retain those officers and directors of Seller subject to the
reporting requirements of Section 16(a) of the Exchange Act (the “Seller Insiders”), both prior to and after
the Effective Time, it is desirable that Seller Insiders not be subject to a risk of liability under Section 16(b) of the Exchange
Act to the fullest extent permitted by applicable Law in connection with the conversion of shares of Seller Common Stock in the
Merger, and for that compensatory and retentive purposes agree to the provisions of this Section 7.18. The boards of directors
of Buyer and of Seller, or a committee of non-employee directors thereof (as such term is defined for purposes of Rule 16b-3(d)
under the Exchange Act), shall promptly, and in any event prior to the Effective Time, take all such steps as may be necessary
or appropriate to cause (i) any dispositions of Seller Common Stock and (ii) any acquisitions of Buyer Common Stock pursuant to
the transactions contemplated by this Agreement and by any Seller Insiders who, immediately following the Merger, will be officers
or directors of the Surviving Corporation subject to the reporting requirements of Section 16(a) of the Exchange Act, to be exempt
from liability pursuant to Rule 16b-3 under the Exchange Act to the fullest extent permitted by applicable Law.
7.19. Document
Archiving.
Seller
shall, prior to the Closing Date, (i) electronically archive and index copies of all documents associated with Loans or the underwriting,
servicing, administration, or monitoring thereof, to the extent requested by Buyer, (ii) archive in a central location all physical
documents associated with Loans or the underwriting, servicing, administration, or monitoring thereof, to the extent requested
by Buyer, and (iii) comply with any other reasonable requests by Buyer regarding documents associated with Loans, the underwriting,
servicing, administration, or monitoring thereof, or the storage of emails. If Buyer terminates this Agreement pursuant to Section
9.1(c) or Section 9.1(f), then Buyer shall promptly reimburse Seller and Seller Bank for any reasonable third-party costs incurred
by Seller or Seller Bank in connection with their performance of the document archiving obligations in this Section 7.19.
7.20. Subordinated
Notes.
For
the avoidance of doubt, upon the Effective Time, Buyer or one of its Subsidiaries shall assume the due and punctual performance
and observance of the covenants and conditions to be performed by Seller or its Subsidiaries under Seller’s 6.00% Fixed-to-Floating
Rate Subordinated Notes due 2030 (the “Subordinated Notes”), and the due and punctual payments of the principal
of and any premium and interest on the Subordinated Notes according to their terms. If requested by Buyer, Seller will, or cause
its Subsidiaries to, reasonably cooperate with Buyer to facilitate the prompt redemption (to the extent possible) or assumption
of the Subordinated Notes at or following the Closing.
ARTICLE
8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1. Conditions
to Obligations of Each Party.
The
respective obligations of each Party to consummate the Merger and the other transactions contemplated hereby are subject to the
satisfaction at or prior to the Effective Time of the following conditions, unless waived by both Parties pursuant to Section
10.6:
(a)
Shareholder Approval. The Seller Shareholder Approval shall have been obtained.
(b)
Regulatory Approvals. (i) All required regulatory Permits or Consents from the Federal Reserve, the ASBD, the TDSML, the
FDIC, and any other Regulatory Authority and (ii) any other regulatory Permits or Consents contemplated by Section 7.4 the failure
of which to obtain has had or would reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect on Buyer and Seller (considered as a consolidated entity), in each case required to consummate the transactions contemplated
by this Agreement, including the Merger, shall have been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired (all such approvals and the expiration of all such waiting periods being
referred to as the “Requisite Regulatory Approvals”).
(c)
Legal Proceedings. No court or Regulatory Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal the consummation of the transactions contemplated by this Agreement (including the Merger).
(d)
Registration Statement. The Registration Statement shall be effective under the Securities Act, no stop orders suspending
the effectiveness of the Registration Statement shall have been issued, and no action, suit, proceeding or investigation by the
SEC to suspend the effectiveness thereof shall have been initiated and be continuing.
(e)
Exchange Listing. The shares of Buyer Common Stock issuable pursuant to the Merger shall have been approved for listing
on Nasdaq, subject to official notice of issuance (if such approval is required by Nasdaq).
(f)
Tax Matters. The Parties shall have received a written opinion of Covington, in form reasonably satisfactory to such Parties
(the “Tax Opinion”), to the effect that the Merger will qualify as a “reorganization” within the
meaning of Section 368(a) of the Internal Revenue Code. In rendering such Tax Opinion, such counsel shall be entitled to rely
upon representations of officers of Seller and Buyer reasonably satisfactory in form and substance to such counsel.
8.2. Conditions
to Obligations of Buyer.
The
obligations of Buyer to consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction at
or prior to the Effective Time of the following conditions, unless waived by Buyer pursuant to Section 10.6:
(a)
Representations and Warranties. For purposes of this Section 8.2(a), the accuracy of the representations and warranties
of Seller set forth in this Agreement shall be assessed as of the date of this Agreement and as of the Effective Time with the
same effect as though all such representations and warranties had been made on and as of the Effective Time (provided that representations
and warranties which are confined to a specified date shall speak only as of such date). The representations and warranties of
Seller set forth in Sections 4.1, 4.2, 4.3(a), 4.3(c), 4.4(a), 4.5, 4.10(a), 4.15, 4.21, 4.34, and 4.35 shall be true and correct
(except, only with respect to Section 4.3(a), for inaccuracies which are de minimis in amount). The representations and warranties
of Seller set forth in Sections 4.3(b), 4.4(b), 4.6, 4.7, 4.9, 4.11, 4.12(a), 4.16, 4.18, 4.22(a), 4.25, 4.27, 4.28, 4.29, 4.30,
4.32, and 4.33 be true and correct in all material respects; provided, that, for purposes of this sentence only, those representations
and warranties which are qualified by references to “material” or “Material Adverse Effect” or to the
“Knowledge” of any Person shall be deemed not to include such qualifications. The representations and warranties set
forth in each other section in ARTICLE 4 shall, in the aggregate, be true and correct in all respects except where the failure
of such representations and warranties to be true and correct has not had or would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on Seller and Seller Bank, taken as a whole; provided, that, for purposes
of this sentence only, those representations and warranties which are qualified by references to “material” or “Material
Adverse Effect” or to the “Knowledge” of any Person shall be deemed not to include such qualifications.
(b)
Performance of Agreements and Covenants. Seller shall have performed in all material respects all obligations, covenants
and agreements required to be performed by it under this Agreement at or prior to the Effective Time.
(c)
Certificates. Seller shall have delivered to Buyer (i) a certificate, dated as of the Closing Date and signed on its behalf
by its chief executive officer and its chief financial officer, to the effect that the conditions set forth in Section 8.1 as
such conditions relate to Seller and in Sections 8.2(a) and 8.2(b) have been satisfied and (ii) certified copies of resolutions
duly adopted by Seller’s board of directors and shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as Buyer and its counsel shall request.
(d)
Asset Quality. In each case as reflected in the Closing Financial Statements, (i) Delinquent Loans shall not exceed 0.70%
of total Loans, (ii) Non-Performing Loans shall not exceed 0.60% of total Loans, (iii) the calculation of Non-Performing Assets
to total Assets shall not be in excess of 0.50%, (iv) Classified Assets to Tier 1 capital plus ALLL ratio shall not be in excess
of 9.80%, (v) Non-Performing Assets shall not exceed $12,000,000, (vi) Classified Assets shall not exceed $35,000,000, and (vii)
ALLL to total Loans shall exceed 0.70%.
(e)
Dissenting Shares. Holders of not more than five percent of the outstanding shares of Seller Common Stock shall have demanded,
properly and in writing, appraisal for such shares of Seller Common Stock held by each such holder under Section 10.351 et seq.
(f)
Regulatory Capital. In each case as reflected in the Closing Financial Statements, (i) Seller Bank shall be “well
capitalized” as defined under applicable Law, (ii) Seller Bank’s Tier 1 leverage ratio shall be no less than 10.25%,
(iii) Seller Bank’s Tier 1 risked-based capital ratio shall be no less than 13.00%, (iv) Seller Bank’s total risked-based
capital ratio shall be no less than 13.50%, (v) Seller Bank’s common equity Tier 1 ratio shall be no less than 13.00%, and
(vi) Seller Bank shall not have received any notification from TDSML or FDIC to the effect that the capital of Seller Bank is
insufficient to permit Seller Bank to engage in all aspects of its business and its currently proposed businesses without material
restrictions, including the imposition of a Burdensome Condition; provided that the conditions contained in Sections 8.2(f)(ii)
through 8.2(f)(v) shall be waived by Buyer if the failure to satisfy such conditions is due primarily to the growth of Seller
Bank’s Assets, as determined by Buyer in its reasonable discretion after consultation with Seller and Seller’s legal
counsel and financial advisor and considering in good faith the results of such consultation.
(g)
Termination of Contracts. Seller shall have delivered to Buyer evidence satisfactory to Buyer in its discretion that each
Contract listed in Section 8.2(g) of Seller’s Disclosure Memorandum has been terminated in its entirety. In addition, Seller
shall have delivered to Buyer evidence satisfactory to Buyer in its discretion that each Contract listed in Section 8.2(g) of
Buyer’s Disclosure Memorandum has been terminated in its entirety.
(h)
Burdensome Condition. No Requisite Regulatory Approval contains, shall have resulted in or would reasonably be expected
to result in, the imposition of a Burdensome Condition as determined by Buyer in its sole discretion after consultation with Seller
and Seller’s legal counsel and financial advisor and considering in good faith the results of such consultation.
(i)
Document Archiving. Seller shall have delivered to Buyer a certificate, dated as of the Closing Date and signed on its
behalf by its chief executive officer and its chief financial officer (and in such reasonable detail as Buyer and their counsel
shall request), to the effect that it has fulfilled its obligations under Section 7.19 in all material respects.
(j)
Seller Warrants. Seller shall have delivered to Buyer duly executed Warrant Cancellation Agreements from all holders of
Seller Warrants.
8.3. Conditions
to Obligations of Seller.
The
obligations of Seller to consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction
at or prior to the Effective Time of the following conditions, unless waived by Seller pursuant to Section 10.6:
(a)
Representations and Warranties. For purposes of this Section 8.3(a), the accuracy of the representations and warranties
of Buyer set forth in this Agreement shall be assessed as of the date of this Agreement and as of the Effective Time with the
same effect as though all such representations and warranties had been made on and as of the Effective Time (provided that representations
and warranties which are confined to a specified date shall speak only as of such date). The representations and warranties of
Buyer set forth in Sections 5.4(a), 5.4(c) and 5.9 shall be true and correct (except for inaccuracies which are de minimis in
amount). The representations and warranties of Buyer set forth in Sections 5.4(b), 5.13 and 5.14 shall be true and correct in
all material respects. The representations and warranties set forth in each other section in ARTICLE 5 shall, in the aggregate,
be true and correct in all respects except where the failure of such representations and warranties to be true and correct has
not had or would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Buyer
and Buyer Bank, taken as a whole; provided that, for purposes of this sentence only, those representations and warranties which
are qualified by references to “material” or “Material Adverse Effect” shall be deemed not to include
such qualifications.
(b)
Performance of Agreements and Covenants. Buyer shall have performed in all material respects all obligations, covenants
and agreements required to be performed by it under this Agreement at or prior to the Effective Time.
(c)
Certificates. Buyer shall have delivered to Seller (i) a certificate, dated as of the Closing Date and signed on its behalf
by its chief executive officer and its chief financial officer, to the effect that the conditions set forth in Section 8.1 as
such conditions relate to Buyer and in Sections 8.3(a) and 8.3(b) have been satisfied and (ii) certified copies of resolutions
duly adopted by Buyer’s board of directors evidencing the taking of all corporate action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, all in such reasonable
detail as Seller and its counsel shall request.
ARTICLE
9
TERMINATION
9.1. Termination.
Notwithstanding
any other provision of this Agreement, and notwithstanding the approval of this Agreement by the shareholders of Seller, this
Agreement may be terminated and the Merger abandoned at any time prior to the Effective Time:
(a)
by mutual written agreement of Buyer and Seller;
(b)
by either Party, by written notice to the other Party, in the event (i) (A) any Regulatory Authority has denied a Requisite Regulatory
Approval and such denial has become final, or has advised any Party that it will not grant (or intends to rescind or revoke if
previously approved) a Requisite Regulatory Approval or (B) any Regulatory Authority shall have requested that Buyer, Seller or
any of their respective Affiliates withdraw (other than for technical reasons), and not be permitted to resubmit within 60 days,
any application with respect to a Requisite Regulatory Approval, unless in each case the failure to obtain the Requisite Regulatory
Approval shall be due to the failure of the Party seeking to terminate this Agreement to perform or observe the obligations, covenants
and agreements of such Party set forth herein, (ii) subject to the terminating Party’s compliance with
Section 7.16, the
shareholders of Seller fail to vote their approval of the matters relating to this Agreement and the transactions contemplated
hereby at Seller’s Shareholders’ Meeting where such matters were presented to such shareholders for approval and voted
upon (taking into account any adjournment or postponement thereof as required by this Agreement), or (iii) any Law or Order permanently
restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement shall have
become final and nonappealable, provided that the Party seeking to terminate this Agreement pursuant to this Section 9.1(b)(iii)
shall have used its reasonable best efforts to contest and appeal the application of such Law or Order or remove such Order;
(c)
by either Party, by written notice to the other Party, in the event that the Merger shall not have been consummated by November
30, 2022, if the failure to consummate the transactions contemplated hereby on or before such date is not caused by any breach
of this Agreement by the Party electing to terminate pursuant to this Section 9.1(c);
(d)
by Buyer, by written notice to Seller, in the event that the board of directors of Seller has (i) failed to make the Seller Recommendation
or otherwise effected a Change in the Seller Recommendation, (ii) breached the terms of Section 7.2 in any material respect adverse
to Buyer, or (iii) breached its obligations under Section 7.1 by failing to call, give notice of, convene or hold Seller’s
Shareholders’ Meeting in accordance with Section 7.1;
(e)
by either Party, by written notice to the other Party (provided that the terminating Party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein), if there shall have been a breach of any of the covenants
or agreements or any of the representations or warranties (or any such representation or warranty shall cease to be true) set
forth in this Agreement on the part of Seller, in the case of a termination by Buyer, or Buyer, in the case of a termination by
Seller, which breach or failure to be true, either individually or in the aggregate with all other breaches by such Party (or
failures of such representations or warranties to be true), would constitute, if occurring or continuing on the Closing Date,
the failure of a condition set forth in Section 8.2, in the case of a termination by Buyer, or Section 8.3, in the case of a termination
by Seller, and which is not cured within 45 days following written notice to Seller, in the case of a termination by Buyer, or
Buyer, in the case of a termination by Seller, or by its nature or timing cannot be cured during such period (or such fewer days
as remain prior to the date specified in Section 9.1(c)); or
(f)
by Buyer, by written notice to Seller, if any Regulatory Authority has granted a Requisite Regulatory Approval but such Requisite
Regulatory Approval contains, or shall have resulted in or would reasonably be expected to result in, the imposition of a Burdensome
Condition.
9.2. Effect
of Termination.
In
the event of the termination and abandonment of this Agreement pursuant to Section 9.1, this Agreement shall become void and have
no further force or effect and there shall be no Liability on the part of any Party for any matters addressed herein or other
claim relating to this Agreement and the transactions contemplated hereby, except that (i) the provisions of this Section 9.2,
Section 7.5(c), and ARTICLE 10, shall survive any such termination and abandonment and (ii) no such termination or abandonment
shall relieve the breaching Party from Liability resulting from any fraud or breach by that Party of this Agreement occurring
prior to such termination or abandonment.
9.3. Non-Survival
of Representations and Covenants.
The
respective representations, warranties, obligations, covenants, and agreements of the Parties shall not survive the Effective
Time except this Section 9.3, Sections 7.5 (the confidentiality provisions), 7.7, 7.8 and 7.9, and ARTICLE 1, ARTICLE 2, ARTICLE
3, and ARTICLE 10, which shall survive in accordance with their respective terms.
ARTICLE
10
MISCELLANEOUS
10.1. Definitions.
(a)
Except as otherwise provided herein, the capitalized terms set forth below shall have the following meanings:
“Acquisition
Agreement” means a term sheet, letter of intent, commitment, memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar agreement (whether written or oral, binding or nonbinding).
“Acquisition
Proposal” means any offer, inquiry, proposal or indication of interest (whether communicated to Seller or publicly announced
to Seller’s shareholders and whether binding or non-binding) by any Person (other than a Buyer Entity) for an Acquisition
Transaction.
“Acquisition
Transaction” means any transaction or series of related transactions (other than the transactions contemplated by this
Agreement) involving: (i) any acquisition or purchase, direct or indirect, by any Person (other than a Buyer Entity) of 20% or
more in interest of the total outstanding voting securities of any Seller Entity whose Assets, either individually or in the aggregate,
constitute more than 25% of the consolidated Assets of the Seller Entities, or any tender offer or exchange offer that if consummated
would result in any Person (other than a Buyer Entity) beneficially owning 20% or more in interest of the total outstanding voting
securities of any Seller Entity whose Assets, either individually or in the aggregate, constitute more than 25% of the consolidated
Assets of the Seller Entities, or any merger, consolidation, share exchange, business combination, reorganization, recapitalization,
liquidation, dissolution or similar transaction involving any Seller Entity whose Assets, either individually or in the aggregate,
constitute more than 25% of the consolidated Assets of the Seller Entities; or (ii) any sale, lease, exchange, transfer, license,
acquisition or disposition of 20% or more of the consolidated Assets of the Seller Entities, taken as a whole.
“Affiliate”
of a Person means any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under
common control with such Person; and, in the case of any Person that is not a natural person, “control” means (i)
the ownership, control, or power to vote 25 percent or more of any class of voting securities of the other Person, (ii) control
in any manner of the election of a majority of the directors, trustees, managing members or general partners of the other Person,
or (iii) the possession, directly or indirectly, of the power to exercise a controlling influence over the management or policies
of such Person, whether through the ownership of voting securities, as trustee or executor, by Contract or any other means.
“Aggregate
Cash Consideration” means cash in the amount of $0.00.
“Aggregate
Cash Equivalent Consideration” means the product of the Stock Consideration and the Average Closing Price.
“Aggregate
Stock Option Payout” means the sum of all Seller Stock Option Payouts.
“Aggregate
Warrant Payout” means the sum of all Seller Warrant Payouts.
“Assets”
of a Person means all of the assets, properties, deposits, businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or intangible, accrued or contingent, or otherwise relating to or utilized
in such Person’s business, directly or indirectly, in whole or in part, whether or not carried on the Books and Records
of such Person, and whether or not owned in the name of such Person or any Affiliate of such Person and wherever located.
“Average
Closing Price” means the average of the daily closing prices for the shares of Buyer Common Stock for the twenty consecutive
full trading days on which such shares are actually traded on Nasdaq (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source) ending at the close of trading on the Determination Date.
“BHC
Act” means the federal Bank Holding Company Act of 1956, as amended.
“Books
and Records” means all files, ledgers and correspondence, all manuals, reports, texts, notes, memoranda, invoices, receipts,
accounts, accounting records and books, financial statements and financial working papers and all other records and documents
of any nature or kind whatsoever, including those recorded, stored, maintained, operated, held or otherwise wholly or partly dependent
on discs, tapes and other means of storage, including any electronic, magnetic, mechanical, photographic or optical process, whether
computerized or not, and all software, passwords and other information and means of or for access thereto, belonging to any specified
Person or relating to the business.
“Business
Day” means any day other than a Saturday, a Sunday or a day on which all banking institutions in Little Rock, Arkansas,
or Houston, Texas, are authorized or obligated by Law or executive order to close.
“Buyer
Bank” means Simmons Bank, an Arkansas chartered bank.
“Buyer
Benefit Plan” means each Employee Benefit Plan currently adopted (including all amendments thereto), maintained by,
sponsored in whole or in part by, or contributed to by any Buyer Entity or Buyer ERISA Affiliate for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other beneficiaries or under which employees, retirees,
former employees, dependents, spouses, directors, independent contractors, or other beneficiaries are eligible to participate
or with respect to which Buyer or any Buyer ERISA Affiliate has or may have any obligation or Liability.
“Buyer
Common Stock” means the $0.01 par value common stock of Buyer.
“Buyer
Entities” means, collectively, Buyer and all Buyer Subsidiaries.
“Buyer
ERISA Affiliate” means any entity which together with a Buyer Entity would be treated, at the relevant time, as a single
employer under Internal Revenue Code Section 414.
“Buyer
Financial Statements” means (i) the consolidated statements of condition (including related notes and schedules, if
any) of Buyer as of December 31, 2020, and as of December 31, 2019 and 2018 and the related statements of operations, changes
in shareholders’ equity, and cash flows (including related notes and schedules, if any) for the year ended December 31,
2020, and for each of the two fiscal years ended December 31, 2019 and 2018 as filed by Buyer in SEC Documents and (ii) the consolidated
statements of condition of Buyer (including related
notes and schedules, if any) and related statements of operations, changes
in shareholders’ equity, and cash flows (including related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to December 31, 2020.
“Buyer
Restricted Stock Award” means each award of shares of Buyer Common Stock or other Equity Right to shares of Buyer Common
Stock subject to vesting, repurchase, performance or other lapse restriction granted under a Buyer Stock Plan.
“Buyer
Stock Options” means each option or other Equity Right to purchase shares of Buyer Common Stock pursuant to stock options
or stock appreciation rights.
“Buyer
Stock Plans” means the existing stock option and other stock-based compensation plans of Buyer designated as follows:
Simmons Executive Stock Incentive Plan - 2006; Simmons Outside Director Stock Incentive Plan - 2006; Simmons Executive Stock Incentive
Plan - 2010; Simmons Outside Director Stock Incentive Plan - 2014; and the Second Amended and Restated Simmons First National
Corporation 2015 Incentive Plan.
“Buyer
Subsidiaries” means the Subsidiaries of Buyer, which shall include any corporation, bank, savings association, limited
liability company, limited partnership, limited liability partnership or other organization acquired as a Subsidiary of Buyer
after the date hereof and held as a Subsidiary by Buyer at the Effective Time.
“Call
Reports” mean Consolidated Reports of Condition and Income (FFIEC Form 041) or any successor form of the Federal Financial
Institutions Examination Council of Seller Bank or Buyer Bank.
“CARES
Act” means the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136 (H.R. 748)).
“Cash
Consideration” means the Aggregate Cash Consideration less the sum of (i) the Aggregate Stock Option Payout and (ii)
the Aggregate Warrant Payout.
“Classified
Assets” means all Classified Loans, plus OREO and other repossessed assets.
“Classified
Loans” means all of the Loans of the Seller Entities that were classified by a Seller Entity as “Substandard,”
“Doubtful,” “Loss,” or words of similar import.
“Consent”
means any consent, approval, authorization, clearance, exemption, waiver, non-objection, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
“Contract”
means any written or oral agreement, arrangement, authorization, commitment, contract, indenture, instrument, lease, license,
mortgage, obligation, plan, understanding, or undertaking of any kind or character, or other document to which any Person is a
party or that is binding on any Person or its capital stock, Assets or business.
“COVID-19”
means the disease caused by the SARS-CoV-2 virus, and any evolutions thereof or any other epidemics, pandemics or disease outbreaks
related thereto.
“COVID-19
Relief Law” means any Law released, issued or promulgated by a Regulatory Authority that grants to any Person the ability
(i) to defer, reduce or eliminate any Taxes, (ii) to borrow or otherwise secure financing (including any PPP Loans), (iii) to
obtain grants or other
financial benefits, in each case as a result of, or in connection with, the effects of COVID-19, including
the CARES Act, the Families First Coronavirus Response Act, and the Consolidated Appropriations Act, 2021.
“Covington”
means Covington & Burling LLP, headquartered at One CityCenter, 850 10th St NW, Washington, DC.
“Criticized
Loan” means a Loan that was classified by a Seller Entity as “Special Mention,” “Substandard,”
“Doubtful,” “Loss,” or words of similar import.
“Default”
means (i) any breach or violation of, default under, contravention of, conflict with, or failure to perform any obligations under
any Contract, Law, Order, or Permit, (ii) any occurrence of any event that with the passage of time or the giving of notice or
both would constitute a breach or violation of, default under, contravention of, or conflict with, any Contract, Law, Order, or
Permit, or (iii) any occurrence of any event that with or without the passage of time or the giving of notice would give rise
to a right of any Person to exercise any remedy or obtain any relief under, terminate or revoke, suspend, cancel, or modify or
change the current terms of, or renegotiate, or to accelerate the maturity or performance of, or to increase or impose any Liability
under, any Contract, Law, Order, or Permit.
“Delinquent
Loans” means all Loans with principal or interest that are 30-89 days past due.
“Derivative
Transaction” means any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction,
cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities,
loans, interest rates, catastrophe events, weather-related events, credit-related events or conditions or any indexes, or any
other similar transaction (including any option with respect to any of these transactions) or combination of any of these transactions,
including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding
any such types of transactions, and any related credit support, collateral or other similar arrangements related to such transactions.
“Determination
Date” means the tenth (10th) Business Day prior to the Closing Date, provided that if shares of the Buyer
Common Stock are not actually traded on Nasdaq on such day, the Determination Date shall be the immediately preceding day to the
tenth Business Day prior to the Closing Date on which shares of Buyer Common Stock actually trade on Nasdaq.
“Disclosure
Memorandum” of a Party means a letter delivered by such Party to the other Party prior to execution of this Agreement,
setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained
in ARTICLE 4 and ARTICLE 5 or to one or more of its covenants contained in this Agreement; provided, that (i) no such item is
required to be set forth in a Disclosure Memorandum as an exception to a representation or warranty if its absence would not be
reasonably likely to result in the related representation or warranty being deemed untrue or incorrect, (ii) the mere inclusion
of an item in a Disclosure Memorandum as an exception to a representation or warranty shall not be deemed an admission by a Party
that such item represents a material exception or fact, event or circumstance or that such item is reasonably expected to result
in a Material Adverse Effect on the Party making the representation or warranty, and (iii) any disclosures made with respect to
a section of ARTICLE 4 or ARTICLE 5 shall be deemed to qualify (A) any other section of ARTICLE 4 or ARTICLE 5 specifically
referenced
or cross-referenced and (B) other sections of ARTICLE 4 or ARTICLE 5 to the extent it is reasonably apparent on its face (notwithstanding
the absence of a specific cross reference) from a reading of the disclosure that such disclosure applies to such other sections.
“Employee
Benefit Plan” means each pension, retirement, profit-sharing, deferred compensation, stock option, restricted stock,
stock appreciation rights, employee stock ownership, share purchase, severance pay, vacation, bonus, incentive, retention, change
in control or other incentive plan, medical, vision, dental or other health plan, any life insurance plan, flexible spending account,
cafeteria plan, vacation, holiday, disability or any other employee benefit plan or fringe benefit plan, including any “employee
benefit plan,” as that term is defined in Section 3(3) of ERISA and any other plan, fund, policy, program, practice, custom,
understanding, agreement, or arrangement providing compensation or other benefits, whether or not such Employee Benefit Plan is
or is intended to be (i) covered or qualified under the Internal Revenue Code, ERISA or any other applicable Law, (ii) written
or oral, (iii) funded or unfunded, (iv) actual or contingent, or (v) arrived at through collective bargaining or otherwise.
“Environmental
Laws” means all Laws, Orders, Permits, opinions or agency requirements relating to pollution or protection of human
health or safety or the environment (including ambient air, surface water, ground water, land surface, or subsurface strata) including
the Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq., the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq., and other Laws relating to emissions, discharges, releases,
or threatened releases of any Hazardous Material, or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of any Hazardous Material.
“Equity
Rights” means all arrangements, calls, commitments, Contracts, options, rights (including preemptive rights or redemption
rights), scrip, units, understandings, warrants, or other binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock or equity interests of a Person or by which a Person
is or may be bound to issue additional shares of its capital stock or other equity interests.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Exhibit”
means the Exhibits so marked, copies of which are attached to this Agreement. Such Exhibits are hereby incorporated by reference
herein and made a part hereof, and may be referred to in this Agreement and any other related instrument or document without being
attached hereto.
“Federal
Reserve” means the Board of Governors of the Federal Reserve System or a Federal Reserve Bank acting under the appropriately
delegated authority thereof, as applicable.
“Fully
Diluted Per Share Value” means the quotient obtained by dividing the Total Dilution Consideration by the Fully Diluted
Seller Shares Outstanding.
“Fully
Diluted Seller Shares Outstanding” means the sum of (i) the Seller Shares Outstanding, (ii) the Seller Stock Options
Outstanding, and (iii) the Seller Warrants Outstanding.
“GAAP”
means U.S. generally accepted accounting principles, consistently applied during the periods involved.
“Hazardous
Material” means (i) any hazardous substance, hazardous material, hazardous waste, regulated substance, or toxic substance
(as those terms are defined by any applicable Environmental Laws), (ii) any chemicals, pollutants, contaminants, petroleum, petroleum
products, or oil, lead-containing paint or plumbing, radioactive materials or radon, asbestos-containing materials and any polychlorinated
biphenyls, and (iii) any other substance which has been, is, or may be the subject of regulatory action by any Regulatory Authority
in connection with any Environmental Law.
“Intellectual
Property” means copyrights, patents, trademarks, service marks, service names, trade names, brand names, internet domain
names, logos together with all goodwill associated therewith, registrations and applications therefor, technology rights and licenses,
computer software (including any source or object codes therefor or documentation relating thereto), trade secrets, franchises,
know-how, inventions, and other intellectual property rights.
“Internal
Revenue Code” means the Internal Revenue Code of 1986, as amended.
“Key
Employee” means an employee of any Seller Entity having the position of Senior Vice President or above.
“Knowledge”
or “knowledge” as used with respect to a Person means the actual knowledge of the chairman, president, chief
executive officer, chief financial officer, chief risk officer (to the extent applicable to such Person), chief operating officer,
or general counsel (to the extent applicable to such Person) of such Person and the knowledge of any such Persons obtained or
which would have been obtained from a reasonable investigation.
“Law”
means any code, law (including common law), ordinance, regulation, reporting or licensing requirement, rule, or statute applicable
to a Person or its Assets, Liabilities, or business, including those promulgated, interpreted or enforced by any Regulatory Authority.
“Liability”
means any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements
of notes, bills, checks, and drafts presented for collection or deposit in the Ordinary Course) of any type, whether accrued,
absolute or contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
“Lien”
means any conditional sale agreement, default of title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, option, right of first refusal, reservation, restriction, security interest, title retention or other security
arrangement, or any adverse right or interest, charge, or claim of any nature whatsoever of, on, or with respect to any property
or property interest, other than Permitted Liens.
“Litigation”
means any action, arbitration, cause of action, lawsuit, claim, complaint, criminal prosecution, governmental or other examination
or investigation, audit (other than regular audits of financial statements by outside auditors), compliance review, inspection,
hearing, administrative or other proceeding relating to or affecting a Party, its business, its records, its policies, its practices,
its compliance with Law, its actions, its Assets (including Contracts related to it), or the transactions contemplated by this
Agreement, but shall not include regular, periodic examinations of depository institutions and their Affiliates by Regulatory
Authorities.
“Loans”
means any written or oral loan, loan agreement, note or borrowing arrangement (including leases, credit enhancements, guarantees
and interest-bearing assets) to which any Seller Entity is party as a creditor.
“Losses”
means any and all demands, claims, actions or causes of action, assessments, losses, diminution in value, damages (including special,
punitive and consequential damages), liabilities, costs, and expenses, including interest, penalties, cost of investigation and
defense, and reasonable attorneys’ and other professional fees and expenses.
“Material”
or “material” for purposes of this Agreement shall be determined in light of the facts and circumstances of
the matter in question; provided, that any specific monetary amount stated in this Agreement shall determine materiality in that
instance (provided that, for purposes of determining materiality in the case of Section 4.20, each monetary amount stated in such
section shall be deemed to be the greater of the amount that is stated or $100,000).
“Material
Adverse Effect” means with respect to any Party and its Subsidiaries, any fact, circumstance, event, change, effect,
development or occurrence that, individually or in the aggregate together with all other facts, circumstances, events, changes,
effects, developments or occurrences, directly or indirectly, (i) has had or would reasonably be expected to result in a material
adverse effect on the condition (financial or otherwise), results of operations, Assets, liabilities or business of such Party
and its Subsidiaries taken as a whole; provided, that a “Material Adverse Effect” shall not be deemed to include effects
to the extent resulting from (A) changes after the date of this Agreement in GAAP or applicable regulatory accounting requirements,
(B) changes after the date of this Agreement in Laws of general applicability to companies in the financial services industry,
(C) changes after the date of this Agreement in global, national or regional political conditions or general economic or market
conditions in the United States (and with respect to each of Seller and Buyer, in the respective markets in which they operate),
including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, and price levels or
trading volumes in the United States or foreign securities markets) affecting other companies in the financial services industry,
(D) after the date of this Agreement, general changes in the credit markets or general downgrades in the credit markets, (E) failure,
in and of itself, to meet earnings projections or internal financial forecasts, but not including any underlying causes thereof
unless separately excluded hereunder, or changes in the trading price of a Party’s common stock, in and of itself, but not
including any underlying causes unless separately excluded hereunder, (F) the public disclosure of this Agreement and the impact
thereof on relationships with customers or employees, (G) any outbreak or escalation of hostilities, declared or undeclared acts
of war or terrorism, (H) changes, after the date hereof, resulting from hurricanes, earthquakes, tornados, floods or other natural
disasters or from any epidemic, pandemic, or outbreak of any disease or other public health event (including the Pandemic and
the implementation of the Pandemic Measures) in the jurisdictions in which Seller or Buyer Bank operate or (I) actions or omissions
taken with the prior written consent of the other Party or expressly required by this Agreement; except, with respect to clauses
(A), (B), (C), (D), (G) and (H), to the extent that the effects of such change disproportionately affect such Party and its Subsidiaries,
taken as a whole, as compared to other companies in the industry in which such Party and its Subsidiaries operate or (ii) prevents
or materially impairs the ability of such Party to timely consummate the transactions contemplated hereby; provided, further,
that the application of the conditions in Section 8.2(d) and Section 8.2(f) is independent of the definition of Material Adverse
Effect and the satisfaction or lack of satisfaction of the requirements therein is not determinative of whether a Material Adverse
Effect has otherwise occurred.
“Merger
Consideration” means the sum of (A) the Per Share Stock Consideration, (B) the Fractional Share Payment (if any), and
(C) any dividends or distributions (if any) pursuant to Section 3.1(d).
“Nasdaq”
means the Nasdaq Global Select Market.
“Non-Performing
Assets” means (i) Non-Performing Loans and (ii) OREO and other repossessed Assets. Non-Performing Assets shall be reflected
in the Closing Financial Statements.
“Non-Performing
Loans” means (i) all Loans with principal and/or interest that are at least 90 days past due and still accruing and
(ii) all Loans with principal and/or interest that are nonaccruing.
“Operating
Property” means any property owned, leased, or operated by the Party in question or by any of its Subsidiaries or in
which such Party or Subsidiary holds a security interest or other interest (including an interest in a fiduciary capacity), and,
where required by the context, includes the owner or operator of such property, but only with respect to such property.
“Option
Exercise Price” means the exercise price of a Seller Stock Option.
“Order”
means any administrative decision or award, decree, injunction, judgment, order, consent decree, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other court, arbitrator, mediator, tribunal, administrative agency,
or Regulatory Authority.
“Ordinary
Course” means the conduct of the business of the Party, in substantially the same manner as such business was operated
on the date of this Agreement, including operations in conformance and consistent with the Party’s practices and procedures
prior to and as of such date. For purposes of this Agreement, the term “Ordinary Course,” with respect to any Party,
shall take into account the commercially reasonable action or inaction by such Party and its Subsidiaries in response to the Pandemic
to comply with the Pandemic Measures to the extent disclosed or made available to the other Party prior to the date hereof or
as otherwise generally consistent with those actions taken by banks generally.
“OREO”
means “other real estate owned” or words of similar import as reflected in the Seller Financial Statements.
“Pandemic”
means any outbreaks, epidemics or pandemics relating to COVID-19, or any evolutions or mutations thereof.
“Pandemic
Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, social
distancing, masking, shut down, closure, sequester or other Laws or directives, guidelines or recommendations promulgated by any
Regulatory Authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case,
in connection with or in response to the Pandemic.
“Participation
Facility” means any facility or property in which the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or operator of such facility or property, but only with
respect to such facility or property.
“Party”
means either of Seller or Buyer, and “Parties” means Seller and Buyer.
“Permit”
means any federal, state, local, or foreign governmental approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be binding upon or inure to the benefit of any Person
or its securities, Assets, or business.
“Per
Share Stock Consideration” means the quotient obtained by dividing the Stock Consideration (for the avoidance of doubt,
as may be adjusted under Section 2.3(c)) by the Seller Shares Outstanding.
“Person”
means a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership,
joint venture, limited partnership, limited liability company, limited liability partnership, trust, business association, group
acting in concert, or any person acting in a Representative capacity.
“PPP
Loan” means (i) any covered loan under paragraph (36) of Section 7(a) of the Small Business Act (15 U.S.C. 636(a)),
as added by Section 1102 of the CARES Act, or (ii) any loan that is an extension or expansion of, or is similar to, any covered
loan described in clause (i).
“Previously
Disclosed” by a Party means information set forth in its Disclosure Memorandum or, if applicable, information set forth
in its SEC Documents that were filed on or after December 31, 2017, in the case of Buyer, or on or after April 26, 2018, in the
case of Seller, but prior to the date hereof (but disregarding risk factor disclosures contained under the heading “Risk
Factors” or disclosures of risk factors set forth in any “forward-looking statements” disclaimer or other statements
that are similarly non-specific or cautionary, predictive or forward-looking in nature).
“Registration
Statement” means the Registration Statement on Form S-4, or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, to be filed with the SEC by Buyer under the Securities Act with respect to the shares of Buyer
Common Stock to be issued to the shareholders of Seller pursuant to this Agreement.
“Regulatory
Authorities” means, collectively, the SEC, Nasdaq, state securities authorities, the Financial Industry Regulatory Authority,
the Securities Investor Protector Corporation, applicable securities, commodities and futures exchanges, and other industry self-regulatory
organizations, the Federal Reserve, the FDIC, the ASBD, the TDSML, the Consumer Financial Protection Bureau, the Public Company
Accounting Oversight Board, the IRS, the DOL, the PBGC, and all other foreign, federal, state, county, local or other governmental,
banking or regulatory agencies, authorities (including taxing and self-regulatory authorities), instrumentalities, commissions,
boards, courts, administrative agencies, commissions or bodies.
“Representative”
means, with respect to any Person, any officer, director, employee, investment banker, financial or other advisor, attorney, auditor,
accountant, consultant, or other representative or agent of or engaged or retained by such Person.
“SEC”
means the United States Securities and Exchange Commission.
“SEC
Documents” means all forms, proxy statements, registration statements, reports, schedules, and other documents filed,
together with any amendments thereto, by any Buyer Entities with the SEC on or after December 31, 2017, or by any Seller Entities
with the SEC on or after April 26, 2018, as applicable.
“Securities
Act” means the Securities Act of 1933, as amended.
“Securities
Laws” means the Securities Act, the Exchange Act, the Investment Company Act of 1940, as amended, the Investment Advisers
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules and regulations of any Regulatory Authority
promulgated thereunder.
“Seller
Bank” means Spirit of Texas Bank SSB, a state savings bank under the laws of Texas and a wholly owned Seller Subsidiary.
“Seller
Bank Capital Stock” means, collectively, Seller Bank Common Stock and any other class or series of capital stock of
Seller Bank.
“Seller
Bank Common Stock” means the common stock, par value $4.00 per share, of Seller Bank.
“Seller
Common Stock” means the common stock, no par value, of Seller.
“Seller
Entities” means, collectively, Seller and all Seller Subsidiaries.
“Seller
ERISA Affiliate” means any entity which together with a Seller Entity would be, at the relevant time, treated as a single
employer under Internal Revenue Code Section 414.
“Seller
Financial Statements” means (i) the consolidated statements of condition (including related notes and schedules, if
any) of Seller as of December 31, 2020, and as of December 31, 2019, 2018, and 2017 and the related statements of operations,
changes in shareholders’ equity, and cash flows (including related notes and schedules, if any) for the year ended December
31, 2020, and for each of the four fiscal years ended December 31, 2019, 2018, and 2017 as filed by Seller in SEC Documents and
(ii) the consolidated statements of condition of Seller (including related notes and schedules, if any) and related statements
of operations, changes in shareholders’ equity, and cash flows (including related notes and schedules, if any) included
in SEC Documents filed with respect to periods ended subsequent to December 31, 2020.
“Seller
Shares Outstanding” means the total number of shares of Seller Common Stock and Seller Restricted Stock Units outstanding
immediately prior to the Effective Time.
“Seller
Subsidiary” means the Subsidiaries of Seller, which shall include Seller Bank, the entities set forth on Schedules 4.4(c)
and 4.5(a) and any corporation, bank, savings association, limited liability company, limited partnership, limited liability partnership
or other organization acquired as a Subsidiary of Seller after the date hereof and held as a Subsidiary by Seller at the Effective
Time.
“Seller
Stock Option Amount” means the Fully Diluted Per Share Value less the Option Exercise Price.
“Seller
Stock Options Outstanding” means the total number of shares of Seller Common Stock underlying the Seller Stock Options
as of immediately prior to the Effective Time.
“Seller
Warrant Agreements” means those warrant agreements issued by Seller in connection with Seller’s acquisition of
Oasis Bank in 2012.
“Seller
Warrant Amount” means the Fully Diluted Per Share Value less the Warrant Exercise Price.
“Seller
Warrants Outstanding” means the total number of shares of Seller Common Stock underlying the Seller Warrants as of immediately
prior to the Effective Time.
“Stock
Consideration” means 18,325,000 shares of Buyer Common Stock.
“Subsidiaries”
means all those corporations, associations, or other business entities of which the entity in question either (i) owns or controls
more than 50% of the outstanding equity securities or other ownership interests either directly or through an unbroken chain of
entities as to each of which more than 50% of the outstanding equity securities is owned directly or indirectly by its parent
(provided, there shall not be included any such entity the equity securities of which are owned or controlled in a fiduciary capacity),
(ii) in the case of partnerships, serves as a general partner, (iii) in the case of a limited liability company, serves as a managing
member, or (iv) otherwise has the ability to elect a majority of the directors, trustees or managing members thereof.
“Superior
Proposal” means any unsolicited bona fide written Acquisition Proposal with respect to which the board of directors
of Seller determines in its good faith judgment (based on, among other things, the advice of outside legal counsel and a financial
advisor) is reasonably likely to be consummated in accordance with its terms, and if consummated, would result in a transaction
more favorable, from a financial point of view, to Seller’s shareholders than the Merger and the other transactions contemplated
by this Agreement (as it may be proposed to be amended by Buyer), taking into account all relevant factors (including the Acquisition
Proposal and this Agreement (including any proposed changes to this Agreement that may be proposed by Buyer in response to such
Acquisition Proposal)); provided, that for purposes of the definition of “Superior Proposal,” the references to “20%”
in the definition of Acquisition Transaction shall be deemed to be references to “50%.”
“Tax”
or “Taxes” means any federal, state, county, local, or foreign taxes, or, to the extent in the nature of a
tax, any charges, fees, levies, imposts, duties, or other assessments, including income, gross receipts, excise, employment, sales,
use, transfer, recording license, payroll, franchise, severance, documentary, stamp, occupation, windfall profits, environmental,
commercial rent, capital stock, paid-up capital, profits, withholding, Social Security, single business and unemployment, real
property, personal property, escheat, unclaimed property, registration, ad valorem, value added, goods and services, alternative
or add-on minimum, estimated, or other tax, imposed or required to be withheld by the United States or any state, county, local
or foreign government or subdivision or agency thereof, including any interest, penalties, and additions imposed thereon or with
respect thereto (including any such interest, penalties, or additions imposed as a result of a failure to timely, correctly or
completely file any Tax Return).
“Tax
Return” means any report, return, information return, or other document supplied to, or required to be supplied to a
Regulatory Authority in connection with Taxes, including any return of an affiliated or combined or unitary group that includes
a Party or its Subsidiaries and including any amendment, attachment, or schedule thereto.
“Total
Dilution Consideration” means the sum of (i) the Aggregate Cash Consideration, (ii) the Aggregate Cash Equivalent Consideration,
(iii) the product obtained by multiplying the Weighted Average Option Exercise Price by the Seller Stock Options Outstanding,
and (iv) the product obtained by multiplying the Weighted Average Warrant Exercise Price by the Seller Warrants Outstanding.
“Treasury
Regulations” means the United States Treasury Regulations promulgated under the Internal Revenue Code, and any reference
to any particular Treasury Regulation section shall be interpreted to include any final or temporary revision of or successor
to that Section regardless of how numbered or classified.
“WARN
Act” means the Worker Adjustment and Retraining Notification Act of 1988 (or any similar applicable local Law insofar
as it relates to an employer’s obligations in the context of mass layoffs or plant closings).
“Warrant
Cancellation Agreements” means the agreements effectuating the cancellation of the Seller Warrants as provided in Section
2.3, in form and substance reasonably satisfactory to Buyer.
“Warrant
Exercise Price” means the exercise price of a Seller Warrant.
“Weighted
Average Option Exercise Price” means the weighted average Option Exercise Price for all the Seller Stock Options Outstanding.
“Weighted
Average Warrant Exercise Price” means the weighted average Warrant Exercise Price for all the Seller Warrants Outstanding.
10.2. Referenced
Pages.
The
terms set forth below shall have the meanings ascribed thereto in the referenced pages:
401(k)
Plan
|
A-47
|
ABCA
|
A-1
|
Aggregate
Cash Increase
|
A-4
|
Agreement
|
A-1
|
ALLL
|
A-28
|
ASBD
|
A-30
|
Bank
Merger
|
A-2
|
Bankruptcy
and Equity Exceptions
|
A-8
|
Book-Entry
Share
|
A-3
|
Burdensome
Condition
|
A-44
|
Buyer
|
A-1
|
Buyer
Certificates
|
A-5
|
Buyer
SEC Reports
|
A-31
|
Canceled
Shares
|
A-3
|
Change
in the Seller Recommendation
|
A-42
|
Chosen
Courts
|
A-73
|
Claim
|
A-48
|
Closing
|
A-2
|
Closing
Date
|
A-2
|
Closing
Financial Statements
|
A-50
|
Confidentiality
Agreement
|
A-45
|
Covered
Employees
|
A-47
|
DOL
|
A-20
|
Effective
Time
|
A-2
|
Exchange
Agent
|
A-5
|
Exchange
Fund
|
A-5
|
FDIA
|
A-9
|
FDIC
|
A-10
|
Fractional
Share Payment
|
A-4
|
Holders
|
A-5
|
Indemnified
Party
|
A-48
|
Independent
Contractors
|
A-20
|
IRS
|
A-18
|
Maximum
Amount
|
A-48
|
Merger
|
A-1
|
Money
Laundering Laws
|
A-18
|
Old
Certificate
|
A-3
|
Party
|
A-65
|
PBGC
|
A-21
|
Permitted
Liens
|
A-15
|
Personally
Identifiable Information
|
A-17
|
Pool
|
A-27
|
Proxy
Statement/Prospectus
|
A-41
|
Real
Property
|
A-15
|
Regulation
O
|
A-27
|
Requisite
Regulatory Approvals
|
A-53
|
Sanctioned
Countries
|
A-28
|
Sanctions
|
A-28
|
Sarbanes-Oxley
Act
|
A-12
|
Section
10.351 et seq.
|
A-7
|
Seller
|
A-1
|
Seller
Bank
|
A-10
|
Seller
Bank Capital Stock
|
A-66
|
Seller
Bank Common Stock
|
A-66
|
Seller
Benefit Plan
|
A-21
|
Seller
Contracts
|
A-24
|
Seller
Dissenting Shareholders
|
A-7
|
Seller
Dissenting Shares
|
A-7
|
Seller
Financial Statements
|
A-66
|
Seller
Recommendation
|
A-41
|
Seller
Regulatory Agreement
|
A-25
|
Seller
Restricted Stock Unit
|
A-4
|
Seller
SEC Reports
|
A-11
|
Seller
Shareholder Approval
|
A-8
|
Seller
Stock Option
|
A-3
|
Seller
Stock Option Payout
|
A-3
|
Seller
Warrant
|
A-4
|
Seller
Warrant Payout
|
A-4
|
Seller’s
Shareholders’ Meeting
|
A-41
|
Subsidiary
Plan of Merger
|
A-2
|
Surviving
Corporation
|
A-1
|
Surviving
Entity
|
A-2
|
Systems
|
A-16
|
Takeover
Statutes
|
A-26
|
Tax
Opinion
|
A-53
|
TBOC
|
A-1
|
TDSML
|
A-8
|
Termination
Fee
|
A-71
|
Voting
Agreement
|
A-1
|
Any singular
term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed followed by the words “without
limitation.” The word “or” shall not be exclusive and “any” means “any and all.” The
words “hereby,” “herein,” “hereof,” “hereunder” and similar terms refer to this
Agreement as a whole and not to any specific Section. All pronouns and any variations thereof refer to the masculine, feminine
or neuter, singular or plural, as the context may require. If a word or phrase is defined, the other grammatical forms of such
word or phrase have a corresponding meaning. A reference to a document, agreement or instrument also refers to all addenda, exhibits
or schedules thereto. A reference to any “copy” or “copies” of a document, agreement or instrument means
a copy or copies that are complete and correct. Unless otherwise specified in this Agreement, all accounting terms used in this
Agreement will be interpreted, and all accounting determinations under this Agreement will be made, in accordance with GAAP. Any
capitalized terms used in any schedule, Exhibit or Disclosure Memorandum but not otherwise defined therein shall have the meaning
set forth in this Agreement. All references to “dollars” or “$” in this Agreement are to United States
dollars. All references to “the transactions contemplated by this Agreement” (or similar phrases) include the transactions
provided for in this Agreement, including the Merger. Any Contract or Law defined or referred to herein or in any Contract that
is referred to herein means such Contract or Law as from time to time amended, modified or supplemented, including (in the case
of Contracts) by waiver or consent and (in the case of Law) by succession of comparable successor Law and references to all attachments
thereto and instruments incorporated therein. The term “made available” means any document or other information that
was (a) provided (whether by physical or electronic delivery) by one Party or its representatives to the other Party or its representatives
at least two Business Days prior to the date hereof, (b) included in the virtual data room (on a continuous basis without subsequent
modification) of a Party at least two Business Days prior to the date hereof, or (c) filed by a Party with the SEC and publicly
available on EDGAR at least two Business Days prior to the date hereof.
10.3. Expenses.
(a)
Except as otherwise provided in this Section 10.3, each of the Parties shall bear and pay all direct costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated hereunder, including filing, registration and application
fees, printing and mailing fees, and fees and expenses of its own financial or other consultants, investment bankers, accountants,
and counsel, except that each of the Parties shall bear and pay one-half of the filing fees payable in connection with the Registration
Statement and the Proxy Statement/Prospectus and printing costs incurred in connection with the printing of the Registration Statement
and the Proxy Statement/Prospectus.
(b)
Notwithstanding the foregoing, if:
(i)
(A) either Seller or Buyer terminates this Agreement pursuant to (1) Section 9.1(b)(ii) or (2) Section 9.1(c), or (B) Buyer terminates
this Agreement pursuant to Section 9.1(e), and, in each case, within 12 months of such termination Seller shall either (x) consummate
an Acquisition Transaction or (y) enter into an Acquisition Agreement with respect to an Acquisition Transaction, whether or not
such Acquisition Transaction is subsequently consummated (provided that, for purposes of this Section 10.3(b)(i), each reference
to “20%” in the definition of Acquisition Transaction shall be deemed to be a reference to “50%”); or
(ii)
Buyer shall terminate this Agreement pursuant to Section 9.1(d), then Seller shall pay to Buyer an amount equal to $22,750,000 (the “Termination
Fee”). If the Termination Fee shall be payable pursuant to subsection (i) of this Section 10.3(b), the Termination Fee shall
be paid in same-day funds at or prior to the earlier of the date of consummation of such Acquisition Transaction or the date of execution
of an Acquisition Agreement with respect to such Acquisition Transaction. If the Termination Fee shall be payable pursuant to subsection
(ii) of this Section 10.3(b), the Termination Fee shall be paid in same-day funds within two Business Days from the date of termination
of this Agreement.
(c)
The payment of the Termination Fee by Seller pursuant to Section 10.3(b) constitutes liquidated damages and not a penalty, and
shall be the sole monetary remedy of Buyer, in the event of termination of this Agreement pursuant to Sections 9.1(b)(ii), 9.1(c),
9.1(d) or 9.1(e). The Parties acknowledge that the agreements contained in Section 10.3(b) are an integral part of the transactions
contemplated by this Agreement, and that without these agreements, they would not enter into this Agreement; accordingly, if Seller
fails to pay any fee payable by it pursuant to this Section 10.3 when due, then Seller shall pay to Buyer its costs and expenses
(including attorneys’ fees) in connection with collecting such fee, together with interest on the amount of the fee at the
prime rate of Citibank, N.A. from the date such payment was due under this Agreement until the date of payment.
10.4. Entire
Agreement; No Third-Party Beneficiaries.
Except
as otherwise expressly provided herein, this Agreement (including the Disclosure Memorandum of each of Seller and Buyer, the Exhibits,
the schedules, and the other documents and instruments referred to herein) together with the Confidentiality Agreement and the
Voting Agreements constitute the entire agreement between the Parties with respect to the transactions contemplated hereunder
and thereunder and supersedes all prior arrangements or understandings with respect thereto, written or oral. Nothing in this
Agreement (including the documents and instruments referred to herein) expressed or implied, is intended to confer upon any Person,
other than the Parties or their respective successors, any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, other than as specifically provided in Section 7.9. The representations and warranties in this Agreement are the
product of negotiations among the Parties and are for the sole benefit of the Parties. Any inaccuracies in such representations
and warranties are subject to waiver by the Parties in accordance herewith without notice or liability to any other Person. In
some instances, the representations and warranties in this Agreement may represent an allocation among the Parties of risks associated
with particular matters regardless of the knowledge of any of the Parties. Consequently, Persons other than the Parties may not
rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the
date of this Agreement or as of any other date. Notwithstanding any other provision hereof to the contrary, no consent, approval
or agreement of any third-party beneficiary will be required to amend, modify to waive any provision of this Agreement.
10.5. Amendments.
To
the extent permitted by Law, this Agreement may be amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties, whether before or after the Seller Shareholder Approval has been obtained; provided, that after obtaining
the Seller Shareholder Approval, there shall be made no amendment that requires further approval by such Seller shareholders.
10.6.
Waivers.
At
any time prior to the Effective Time, the Parties, by action taken or authorized by their respective boards of directors, may,
to the extent permitted by Law, (a) extend the time for the performance of any of the obligations or other acts of the other Parties,
(b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto,
and (c) waive compliance with any of the
agreements or satisfaction of any conditions contained herein; provided, that after the
Seller Shareholder Approval has been obtained, there may not be, without further approval of such shareholders, any extension
or waiver of this Agreement or any portion thereof that requires further approval under applicable Law. Any agreement on the part
of a Party to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such Party,
but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other failure to comply with an obligation, covenant,
agreement or condition.
10.7. Assignment.
Except
as expressly contemplated hereby, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned
by any Party (whether by operation of Law or otherwise) without the prior written consent of the other Party. Any purported assignment
in contravention hereof shall be null and void. Subject to the preceding sentences, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the Parties and their respective successors and assigns.
10.8. Notices.
All
notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered by hand,
by registered or certified mail, postage pre-paid, or by courier or overnight carrier, or by email (with receipt confirmed) to
the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered:
|
Buyer:
|
Simmons First
National Corporation
|
|
|
601 E. 3rd
Street, 12th Floor
|
|
|
Little Rock, Arkansas
72201
|
|
|
Attention: George Makris,
Jr., Chairman and CEO
|
|
|
Email: george.makris@simmonsbank.com
|
|
|
|
|
With a Copy to:
|
Simmons First National
Corporation
|
|
|
601 E. 3rd
Street, 12th Floor
|
|
|
Little Rock, Arkansas
72201
|
|
|
Attention: George Makris
III, EVP, General Counsel, & Secretary
|
|
|
Email: george.a.makris@simmonsbank.com
|
|
|
|
|
Copy to Counsel:
|
Covington & Burling
LLP
|
|
|
One CityCenter
|
|
|
850 Tenth Street NW
|
|
|
Washington, DC 20001
|
|
|
Facsimile
Number: (202) 778-5986
|
|
|
Attention: Frank M. Conner
III
|
|
|
Email: rconner@cov.com;
|
|
|
Attention: Christopher
J. DeCresce
|
|
|
Email: cdecresce@cov.com;
|
|
|
Attention: Charlotte May
|
|
|
Email: cmay@cov.com
|
|
|
|
|
Seller:
|
Spirit of Texas Bancshares,
Inc.
|
|
|
1836 Spirit of Texas Way
|
|
|
Conroe, Texas 77301
|
|
|
Attention: Dean O. Bass,
CEO
|
|
|
Email: dbass@sotb.com
|
|
Copy to Counsel:
|
Hunton Andrews Kurth LLP
|
|
|
1445 Ross Avenue, Suite
3700
|
|
|
Dallas, Texas 75202
|
|
|
Facsimile Number: (214)
740-7182
|
|
|
Attention: Peter G. Weinstock
|
|
|
Email: pweinstock@huntonak.com
|
|
|
Attention: Beth A. Whitaker
|
|
|
Email: bwhitaker@huntonak.com
|
10.9. Governing
Law; Jurisdiction; Waiver of Jury Trial
(a)
The Parties agree that this Agreement shall be governed by and construed in all respects in accordance with the Laws of the State
of Arkansas without regard to any conflict of Laws or choice of Law principles that might otherwise refer construction or interpretation
of this Agreement to the substantive Law of another jurisdiction (except that matters relating to the fiduciary duties of the
board of directors of Seller shall be subject to the Laws of the State of Texas).
(b)
Each Party agrees that it will bring any action or proceeding in respect of any claim arising out of or related to this Agreement
or the transactions contemplated hereby exclusively in any federal or state court of competent jurisdiction located in the State
of Arkansas (the “Chosen Courts”), and, solely in connection with claims arising under this Agreement or the
transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts,
(ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that
the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party, and (iv) agrees that service of process
upon such party in any such action or proceeding will be effective if notice is given in accordance with Section 10.8.
(c)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES
AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH
PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
10.9.
10.10.
Counterparts; Signatures.
This
Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument. This Agreement and any signed agreement or instrument entered into in connection
with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered by electronic means,
including by e-mail delivery of a “.pdf” format data file, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version
thereof delivered in person. No Party or to any such agreement or instrument shall raise the use of electronic means, including
e-mail delivery of a “.pdf” format data file, to make or deliver a signature to this Agreement or any amendment
or
waiver hereto or any agreement or instrument entered into in connection with this Agreement or the fact that any signature or
agreement or instrument was made, transmitted or communicated through the use of electronic means, including e-mail delivery of
a “.pdf” format data file, as a defense to the formation of a contract and each Party forever waives any such defense.
10.11. Captions;
Articles and Sections.
The
captions contained in this Agreement are for reference purposes only and are not part of this Agreement. Unless otherwise indicated,
all references to particular Articles or Sections shall mean and refer to the referenced Articles and Sections of this Agreement.
10.12. Interpretations.
Neither
this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any Party, whether under any rule
of construction or otherwise. No Party shall be considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys and, unless otherwise defined herein, the words
used shall be construed and interpreted according to their ordinary meaning so as fairly to accomplish the purposes and intentions
of all Parties.
10.13. Enforcement
of Agreement.
The
Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed
in accordance with its specific terms or was otherwise breached and that money damages would be both incalculable and an insufficient
remedy for any breach of this Agreement. It is accordingly agreed that the Parties shall be entitled, without the requirement
of posting bond, to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity. Each of the Parties waives any defense in any action for specific performance
that a remedy at law would be adequate.
10.14.
Severability.
Any
term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions
of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
10.15. Confidential
Supervisory Information.
Notwithstanding
any other provision of this Agreement, no disclosure, representation or warranty shall be made (or other action taken) pursuant
to this Agreement that would involve the disclosure of confidential supervisory information as defined in 12 C.F.R. § 261.2(b)
and as identified in 12 C.F.R. § 309.5(g)(8) of a Regulatory Authority by any Party to the extent prohibited by applicable
Law. To the extent legally permissible, appropriate substitute disclosures or actions shall be made or taken under circumstances
in which the limitations of the preceding sentence apply.
[Signatures
on following page.]
IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf by its duly authorized officers
as of the day and year first above written.
|
SIMMONS
FIRST NATIONAL CORPORATION
|
|
|
|
|
By:
|
/s/
George A. Makris, Jr.
|
|
|
Name: George A. Makris,
Jr.
|
|
|
Title: Chairman and Chief
Executive Officer
|
|
|
|
|
spirit
of texas bancshares, inc.
|
|
|
|
|
By:
|
/s/
Dean O. Bass
|
|
|
Name: Dean O. Bass
|
|
|
Title: Chairman and Chief
Executive Officer
|
[Signature Page
to Agreement and Plan of Merger]
Annex
B
FORM OF SUPPORT
AND NON-COMPETITION AGREEMENT
This
SUPPORT AND NON-COMPETITION AGREEMENT, dated as of November 18, 2021 (this “Agreement”), by and among Simmons
First National Corporation, an Arkansas corporation (“Buyer”), Spirit of Texas Bancshares, Inc. (“Seller”),
a Texas corporation, and the undersigned [officer][director] (the “Individual”) of Seller.
W I T N E
S E T H:
WHEREAS,
concurrently with the execution of this Agreement, Buyer and Seller are entering into an Agreement and Plan of Merger, dated as
of the date hereof (as amended, supplemented, restated or otherwise modified from time to time, the “Merger Agreement”),
pursuant to which, among other things, Seller will merge with and into Buyer, with Buyer as the surviving corporation (the “Merger”);
WHEREAS,
as of the date hereof, the Individual is a [officer][director] of Seller or Seller Bank and has Beneficial Ownership of, in the
aggregate, those shares of common stock, no par value, of Seller (“Seller Common Stock”) specified on Schedule
1 attached hereto, which, by virtue of the Merger, will be converted into the right to receive shares of common stock, $0.01 par
value per share, of Buyer (“Buyer Common Stock”), and therefore the Merger is expected to be of substantial
benefit to the Individual;
WHEREAS,
as a material inducement to Buyer entering into the Merger Agreement, Buyer has requested that the Individual agree, and the Individual
has agreed, to enter into this Agreement and abide by the covenants and obligations set forth herein; and
WHEREAS,
other individuals, as a material inducement to Buyer entering into the Merger Agreement, will enter into and abide by the covenants
and obligations set forth in substantially similar support and non-competition agreements.
NOW
THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained,
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
General
1.1.
Defined Terms. The following capitalized terms, as used in this Agreement, shall have the meanings set forth below. Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Merger Agreement.
“Affiliate”
of a Person means any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under
common control with such Person.
“Beneficial
Ownership” by a Person of any securities means ownership by any Person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares (i) voting power which includes the power to vote, or to
direct the voting of, such security; and/or (ii) investment power which includes the power to dispose, or to direct the disposition,
of such security; and shall otherwise be interpreted in accordance with the term “beneficial ownership” as defined
in Rule 13d-3 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended; provided,
that for purposes of determining Beneficial Ownership, a Person shall be deemed to be the Beneficial Owner of any securities
which
such Person has, at any time during the term of this Agreement, the right to acquire pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise (irrespective of whether
the right to acquire such securities is exercisable immediately or only after the passage of time, including the passage of time
in excess of 60 days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing). The
terms “Beneficially Own” and “Beneficially Owned” shall have a correlative meaning.
“Business”
means the business of acting as a commercial, community or retail banking business, including but not limited to entities which
lend money and take deposits.
“control”
(including the terms “controlling”, “controlled by” and “under common control with”),
with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power
to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities,
as trustee or executor, by Contract or any other means.
“Constructive
Sale” means, with respect to any security, a short sale with respect to such security, entering into or acquiring an
offsetting derivative Contract with respect to such security, entering into or acquiring a futures or forward Contract to deliver
such security or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly
materially changing the economic benefits and risks of ownership of any security.
“Covered
Shares” means, with respect to the Individual, the Individual’s Existing Shares, together with any shares of Seller
Common Stock or other capital stock of Seller and any securities convertible into or exercisable or exchangeable for shares of
Seller Common Stock or other capital stock of Seller, in each case that the Individual acquires Beneficial Ownership of on or
after the date hereof.
“Encumbrance”
means any security interest, pledge, mortgage, lien (statutory or other), charge, option to purchase, lease or other right to
acquire any interest or any claim, restriction, covenant, title defect, hypothecation, assignment, deposit arrangement or other
encumbrance of any kind or any preference, priority or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement), excluding restrictions under securities Laws.
“Existing
Shares” means, with respect to the Individual, all shares of Seller Common Stock Beneficially Owned by the Individual
as specified on Schedule 1 hereto.
“Permitted
Transfer” means a Transfer (i) as the result of the death of the Individual by the Individual to a descendant, heir,
executor, administrator, testamentary trustee, lifetime trustee or legatee of the Individual, (ii) Transfers to Affiliates (including
trusts) and family members in connection with estate and tax planning purposes, (iii) Transfers to any other shareholder and director
and/or executive officer of Seller who has executed a copy of this Agreement or a support and non-competition agreement identical
to this Agreement on the date hereof; and (iv) a surrender of Covered Shares to the Company in connection with the vesting, settlement
or exercise of Seller Stock Options or Seller Warrants to satisfy any withholding for the payment of taxes incurred in connection
with such vesting, settlement or exercise, or, in respect of Seller Stock Options, the exercise price thereon; provided, that
in each case prior to the effectiveness of such Transfer, such transferee executes and delivers to Buyer and Seller an agreement
that is identical to this Agreement or such other written agreement, in form and substance acceptable to Buyer and Seller, to
assume all of Individual’s obligations hereunder in respect of the Covered Shares subject to such Transfer and to be bound
by the terms of this Agreement, with respect to the Covered Shares subject to such Transfer, to the same extent as the Individual
is bound hereunder and to make each of the representations and warranties hereunder in respect of the Covered Shares Transferred
as the Individual shall have made hereunder.
“Person”
means a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership,
joint venture, limited partnership, limited liability company, limited liability partnership, trust, business association, group
acting in concert, or any person acting in a Representative capacity.
“Representatives”
means, with respect to any Person, any officer, director, employee, investment banker, financial or other advisor, attorney, auditor,
accountant, consultant, or other representative or agent of or engaged or retained by such Person.
[“Restricted
Period” has the meaning set forth in Section 2.3(a) hereof.]
“Transfer”
means, with respect to any security, the direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation,
or the grant, creation or suffrage of an Encumbrance in or upon, or the gift, placement in trust, or the Constructive Sale or
other disposition of such security (including transfers by testamentary or intestate succession or otherwise by operation of Law)
or any right, title or interest therein (including, but not limited to, any right or power to vote to which the holder thereof
may be entitled, whether such right or power is granted by proxy or otherwise), or the record or Beneficial Ownership thereof,
the offer to make such a sale, transfer, Constructive Sale or other disposition, and each agreement, arrangement or understanding,
whether or not in writing, to effect any of the foregoing (other than a proxy for the purpose of voting the Individual’s
Covered Shares in accordance with Section 2.1 hereof).
ARTICLE II
COVENANTS OF INDIVIDUAL
2.1.
Agreement to Vote. The Individual hereby irrevocably and unconditionally agrees that during the term of this Agreement,
at Seller’s Shareholders’ Meeting or at any other meeting of the shareholders of Seller, however called, including
any adjournment or postponement thereof, and in connection with any written consent of the shareholders of Seller, the Individual
shall, in each case to the fullest extent that such matters are submitted for the vote or written consent of the Individual and
that the Covered Shares are entitled to vote thereon or consent thereto:
(a)
appear at each such meeting or otherwise cause the Covered Shares as to which the Individual controls the right to vote to be
counted as present thereat for purposes of calculating a quorum; and
(b)
vote (or cause to be voted), in person or by proxy, or deliver (or cause to be delivered) a written consent covering, all of the
Covered Shares as to which the Individual controls the right to vote:
(i)
in favor of the adoption and approval of the Merger Agreement and the consummation of the transactions contemplated thereby, including
the Merger, and any actions required in furtherance thereof;
(ii)
against any action or agreement that could result in a breach of any covenant, representation or warranty or any other obligation
of Seller under the Merger Agreement or of the Individual contained in this Agreement;
(iii)
against any Acquisition Proposal, without regard to the terms of such Acquisition Proposal; and
(iv)
against any action, agreement, amendment to any agreement or organizational document, transaction, matter or proposal submitted
for the vote or written consent of the shareholders of Seller that is intended or would reasonably be expected to impede, interfere
with, prevent, delay, postpone, discourage, disable, frustrate the purposes of or adversely affect the Merger or the other transactions
contemplated by the Merger Agreement or this Agreement or the performance by Seller of its obligations under the Merger Agreement
or by the Individual of his or her obligations under this Agreement.
2.2.
No Inconsistent Agreements. The Individual hereby covenants and agrees that, except for this Agreement, the Individual
(a) has not entered into, and shall not enter into at any time while this Agreement remains in effect, any voting agreement or
voting trust or any other Contract with respect to the Covered Shares, (b) has not granted, and shall not grant at any time while
this Agreement remains in effect, a proxy, Consent or power of attorney with respect to the Covered Shares, (c) will not commit
any act, except for Permitted Transfers, that could restrict or affect his or her legal power, authority and right to vote any
of the Covered Shares then held of record or Beneficially Owned by the Individual or otherwise prevent or disable the Individual
from performing any of his or her obligations under this Agreement, and (d) has not taken and shall not take any action that would
make any representation or warranty of the Individual contained herein untrue or incorrect or have the effect of impeding, interfering
with, preventing, delaying, postponing, discouraging, disabling or adversely affecting the Individual’s performance of any
of his or her obligations under this Agreement.
2.3.
[Non-Competition.
(a)
The Individual hereby covenants and agrees that, for a period commencing on the Closing Date and terminating on the [first][second]
anniversary of the Closing Date (the “Restricted Period”), such Individual shall not within 50 miles of any
branch or other office of Seller or Seller Bank in operation as of the date of this Agreement, directly or indirectly, either
for him or herself or for any other Person other than for Buyer or its Affiliates, participate in any business (including, without
limitation, any division, group or franchise of a larger organization) that engages (or proposes to engage) in the Business; provided,
that if as of the date hereof the Individual holds not more than a 5% direct or indirect equity interest in such Person, then
the Individual may retain (but not increase) such ownership interest without being deemed to “participate” in the
Business conducted by such Person. For purposes of this Agreement, the term “participate” shall mean having more than
5% direct or indirect ownership interest in any Person, whether as a sole proprietor, investor, owner, equity holder, partner,
member, manager, joint venturer, creditor or otherwise, or rendering any direct or indirect service or assistance to any Person
(whether as a director, officer, manager, member, supervisor, employee, agent, consultant or otherwise), with respect to the Business.
(b)
The Individual covenants and agrees that during the Restricted Period, the Individual shall not directly or indirectly, as employee,
agent, consultant, director, equity holder, member, manager, partner or in any other capacity, without Buyer’s prior written
consent (other than for the benefit of Buyer or its Affiliates), solicit, call upon, communicate with or attempt to communicate
(whether by mail, telephone, electronic mail, personal meeting or any other means, excluding general solicitations of the public
that are not based in whole or in part on any list of customers of Seller or any of its Affiliates, including Seller Bank) with
any Person that is or was a customer of Seller or any of its Affiliates (including Seller Bank) during the one-year period preceding
the Closing Date for the purpose of engaging in opportunities related to the Business or contracts related to the Business or,
except in the ordinary course of conducting the business described in Schedule 2, interfere with or damage (or attempt
to interfere with or damage) any relationship between Seller or its Affiliates (including Seller Bank) and any such customers.
(c)
The Individual covenants and agrees that during the Restricted Period, such Individual shall not directly or indirectly, as employee,
agent, consultant, director, equity holder, member, manager, partner or in any other capacity, without Buyer’ prior written
consent, employ, engage, recruit, hire, solicit or induce, or cause others to solicit or induce, for employment or engagement,
any employee of Seller or its Affiliates (including Seller Bank) (excluding general solicitations of the public that are not based
on any list of, or directed at, employees of Seller or its Affiliates (including Seller Bank)).]
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1.
Representations and Warranties of the Individual. The Individual hereby represents and warrants to Seller and Buyer as
follows:
(a)
Organization; Authorization; Validity of Agreement; Necessary Action. The Individual has the requisite power, capacity
and authority to execute and deliver this Agreement, to perform his or her obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and delivered by the Individual and, assuming this Agreement
constitutes a valid and binding obligation of the other parties hereto, constitutes a legal, valid and binding obligation of the
Individual, enforceable against him or her in accordance with its terms (except as may be limited by the Bankruptcy and Equity
Exceptions).
(b)
Ownership. Except for the Covered Shares, the Individual is not the Beneficial Owner or registered owner of any other shares
of Seller Common Stock or rights to acquire Seller Common Stock. The Existing Shares are, and all of the Covered Shares owned
by the Individual from the date hereof through and on the Closing Date will be, Beneficially Owned and owned of record by the
Individual except to the extent such Covered Shares are Transferred after the date hereof pursuant to a Permitted Transfer. From
the date hereof through and on the Closing Date, the Individual has and will have good and marketable title to the Existing Shares,
free and clear of any Encumbrances (other than any restrictions created by this Agreement). As of the date hereof, and except
for those Existing Shares expressly disclosed on Schedule 1 as solely held by the Individual’s spouse or parent that
are deemed beneficially owned by the Individual, the Individual has and will have at all times through the Closing Date sole
voting power (including the right to control such vote as contemplated herein), sole power of disposition, sole power to issue
instructions with respect to the matters set forth in ARTICLE II hereof, and sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Individual’s Existing Shares and with respect to all of the Covered
Shares owned by the Individual at all times through the Closing Date, subject to Section 6.157 of the TBOC. The Individual has
possession of an outstanding certificate or outstanding certificates representing all of the Covered Shares (other than Covered
Shares held in book-entry form) and such certificate or certificates does or do not contain any legend or restriction inconsistent
with the terms of this Agreement, the Merger Agreement or the transactions contemplated hereby and thereby.
(c)
No Violation. The execution and delivery of this Agreement by the Individual does not, and the performance by the Individual
of his or her obligations under this Agreement and the consummation by him or her of the transactions contemplated hereby will
not, (i) conflict with or violate, or require any Consent pursuant to any Law or Order applicable to the Individual or by which
any of his or her Assets is bound, or (ii) conflict with, result in any Default, require any Consent pursuant to or result in
the creation of any Encumbrance on the Assets of the Individual pursuant to, any Contract to which the Individual is a party or
by which the Individual or any of his or her Assets or Covered Shares are bound.
(d)
Consents and Approvals. No Consent of the Individual’s spouse is necessary under any “community property”
or other Laws in order for the Individual to enter into and perform his or her obligations under this Agreement.
(e)
Legal Proceedings. There is no Litigation pending or, to the knowledge of the Individual, threatened against or affecting
the Individual or any of his or her Affiliates that could reasonably be expected to impair the ability of the Individual to perform
his or her obligations hereunder or to consummate the transactions contemplated hereby on a timely basis.
(f)
Reliance by Buyer. The Individual understands and acknowledges that Buyer is entering into the Merger Agreement in reliance
upon the Individual’s execution and delivery of this Agreement and the representations and warranties of Individual contained
herein.
ARTICLE IV
OTHER COVENANTS
4.1.
Prohibition on Transfers; Other Actions.
(a)
Until the earlier of the receipt of the Seller Shareholder Approval or the date on which the Merger Agreement is terminated in
accordance with its terms, the Individual hereby agrees not to (i) Transfer any of the Covered Shares or any other interest specifically
in the Covered Shares unless such Transfer is a Permitted Transfer; (ii) enter into any Contract with any Person, or take any
other action, that violates or conflicts with or would reasonably be expected to violate or conflict with, or result in or give
rise to a violation of or conflict with, the Individual’s representations, warranties, covenants and obligations under this
Agreement; (iii) except as otherwise permitted by this Agreement or by Order, take any action that could restrict or otherwise
affect the Individual’s legal power, authority and right to vote all of the Covered Shares then Beneficially Owned by him
or her in accordance with this Agreement, or otherwise comply with and perform his or her covenants and obligations under this
Agreement; or (iv) publicly announce any intention to do any of the foregoing. Any Transfer in violation of this provision shall
be void. Following the date hereof, Seller shall notify its transfer agent that there is a stop transfer order with respect to
all of the Covered Shares until the termination of this Agreement and that this Agreement places limits on the voting of the Covered
Shares subject to the provisions of this Agreement.
(b)
The Individual understands and agrees that if the Individual attempts to Transfer, vote or provide any other Person with the authority
to vote any of the Covered Shares other than in compliance with this Agreement, Seller shall not, and the Individual hereby unconditionally
and irrevocably instructs Seller to not (i) permit such Transfer on its books and records, (ii) issue a new certificate representing
any of the Covered Shares, or (iii) record such vote unless and until the Individual shall have complied with the terms of this
Agreement.
(c)
Statements. The Individual shall not make any statement, written or oral, to the effect that he or she does not support
the Merger or that other shareholders of Seller should not support the Merger.
4.2.
Certain Events. The Individual agrees that this Agreement and the obligations hereunder shall attach to the Covered Shares
and shall be binding upon any Person to which legal or Beneficial Ownership of the Covered Shares shall pass, whether by operation
of Law or otherwise, including the Individual’s successors or assigns. In the event of a stock split, stock dividend, merger
(other than the Merger), exchange, reorganization, recapitalization or distribution, or any change in the capital structure of
Seller affecting the Seller Common Stock, the terms “Existing Shares” and “Covered Shares” shall be deemed
to refer to and include such shares as well as all such additional securities of Seller and any securities into which or for which
any or all of such securities may be changed or exchanged or which are received in such transaction.
4.3.
Notice of Acquisitions, etc. The Individual hereby agrees to notify Seller as promptly as practicable (and in any event
within two Business Days after receipt) in writing of (i) the number of any additional shares of Seller Common Stock or other
securities of Seller of which the Individual acquires Beneficial Ownership on or after the date hereof and (ii) any proposed Permitted
Transfers of the Covered Shares, Beneficial Ownership thereof or other interest specifically therein.
4.4.
Non-Solicit. In his or her capacity as a shareholder of Seller, and not in his or her capacity as a [director][officer]
of Seller, the Individual shall not, and shall use his or her reasonable best efforts to cause his or her Affiliates and each
of their respective Representatives not to, directly or indirectly, (a) solicit, initiate, encourage (including by providing information
or assistance), facilitate or induce any Acquisition Proposal, (b) engage or participate in any discussions or negotiations regarding,
or furnish or cause to be furnished to any Person any information or data in connection with, or take any other action to facilitate
any inquiries or the making of any offer or proposal that constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal, (c) adopt, approve, agree to, accept, endorse or recommend any Acquisition Proposal, (d) solicit proxies or become a
“participant” in a “solicitation” (as such terms are defined in the Exchange Act) with respect to an Acquisition
Proposal or otherwise encourage or assist any party in taking or planning any action that would reasonably be expected to compete
with, restrain or otherwise serve to interfere with or inhibit the timely consummation of the Merger in accordance with the terms
of the Merger Agreement, (e) initiate a shareholders’ vote or action by consent of Seller’s shareholders with respect
to an Acquisition Proposal, (f) except by reason of this Agreement, become a member of a “group” (as such term is
used in Section 13(d) of the Exchange Act) with respect to any voting securities of Seller that takes any action in support of
an Acquisition Proposal, or (g) approve, endorse, recommend, agree to or accept, or propose to approve, endorse, recommend, agree
to or accept, any Acquisition Agreement contemplating or otherwise relating to any Acquisition Transaction.
4.5.
Waiver of Appraisal Rights. To the fullest extent permitted by applicable Law, the Individual hereby waives any rights
of appraisal he or she may have under applicable Law.
4.6.
Further Assurances. From time to time, at the request of Buyer and Seller and without further consideration, the Individual
shall execute and deliver such additional documents and take all such further action as may be reasonably necessary to effect
the actions and consummate the transactions contemplated by this Agreement. Without limiting the foregoing, the Individual hereby
authorizes Buyer and Seller to publish and disclose in any announcement or disclosure related to the Merger Agreement, including
the Proxy Statement/Prospectus, the Individual’s identity and Beneficial Ownership of the Covered Shares and the nature
of the Individual’s obligations under this Agreement.
ARTICLE V
MISCELLANEOUS
5.1.
Termination. This Agreement shall remain in effect until the earlier to occur of (a) the Closing and (b) the date of termination
of the Merger Agreement in accordance with its terms; provided, that [(i) if the Closing occurs, the provisions of Section
2.3 shall survive until the end of the Restricted Period, and (ii)] the provisions of ARTICLE V shall survive any termination
of this Agreement. Nothing in this Section 5.1 and no termination of this Agreement shall relieve or otherwise limit any
party of liability for fraud, or willful or intentional breach of this Agreement.
5.2.
No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in Buyer or Seller any direct or indirect
ownership or incidence of ownership of or with respect to any Covered Shares. All rights, ownership and economic benefits of and
relating to the Covered Shares, if any, shall remain vested in and belong to the Individual, and Buyer or Seller shall not have
any authority to direct the Individual in the voting or disposition of any of the Covered Shares, except as otherwise provided
herein.
5.3.
Notices. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient
if delivered by hand, by registered or certified mail, postage pre-paid, or by courier or overnight carrier, or by email (with
receipt confirmed) to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
(a)
Buyer:
Simmons
First National Corporation
601
E. 3rd Street, 12th Floor
Little
Rock, Arkansas 72201
Attention:
George Makris, Jr., Chairman and CEO
Email:
george.makris@simmonsbank.com
with
a copy to:
Simmons
First National Corporation
601
E. 3rd Street, 12th Floor
Little
Rock, Arkansas 72201
Attention:
George Makris III, EVP, General Counsel, & Secretary
Email:
george.a.makris@simmonsbank.com
Copy
to counsel:
Covington
& Burling LLP
One
CityCenter
850
Tenth Street, NW
Washington,
DC 20001
Facsimile
Number: (202) 778-5988
Attention:
Frank M. Conner III
Email:
rconner@cov.com;
Attention:
Christopher J. DeCresce
Email:
cdecresce@cov.com;
Attention:
Charlotte May
Email:
cmay@cov.com
(b)
Seller:
Spirit
of Texas Bancshares, Inc.
1836
Spirit of Texas Way
Conroe,
Texas 77301
Attention:
Dean O. Bass, Chairman and Chief Executive Officer
Email:
dbass@sotb.com
Copy
to Counsel:
Hunton
Andrews Kurth LLP
1445
Ross Avenue, Suite 3700
Dallas,
Texas 75202
Facsimile
Number: (214) 740-7182
Attention:
Peter G. Weinstock
Email:
pweinstock@huntonak.com
Attention:
Beth A. Whitaker
Email:
bwhitaker@huntonak.com
(c)
if to the Individual, to those persons indicated on Schedule 1.
5.4.
Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any
party hereto, whether under any rule of construction or otherwise. No party to this Agreement shall be considered the draftsman.
The parties hereto acknowledge and agree that this Agreement has been reviewed, negotiated, and accepted by all parties hereto
and their attorneys and, unless otherwise defined herein, the words used shall be construed and interpreted according to their
ordinary meaning so as fairly to accomplish the purposes and intentions of all parties hereto. Section headings of this Agreement
are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement. All pronouns
and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. Whenever
the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed
to be followed by the words “without limitation.”
5.5.
Counterparts; Signatures. This Agreement may be executed in two or more counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one and the same instrument. This Agreement and any signed agreement
or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed
and delivered by means of a facsimile machine or by e-mail delivery of a “.pdf” format data file, shall be treated
in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect
as if it were the original signed version thereof delivered in person. No Party or to any such agreement or instrument shall raise
the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement
or any amendment or waiver hereto or any agreement or instrument entered into in connection with this Agreement or the fact that
any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail delivery
of a “.pdf” format data file as a defense to the formation of a contract and each Party forever waives any such defense.
5.6.
Entire Agreement. This Agreement and, to the extent referenced herein, the Merger Agreement, together with the several
agreements and other documents and instruments referred to herein or therein or annexed hereto or thereto, constitute the entire
agreement between the parties hereto with respect to the transactions contemplated hereunder and thereunder and supersede all
prior arrangements or understandings with respect thereto, written or oral[; provided that with respect to the subject matter
contained in Section 2.3 of this Agreement, this Agreement shall supplement, and shall not supersede or in any way diminish, any
prior agreements, arrangements or understandings, and this Agreement and all such other agreements, arrangements, and understandings
shall remain in full force and effect, independent of one another].
5.7.
Governing Law; Jurisdiction; Waiver of Jury Trial.
(a)
The parties hereto agree that this Agreement shall be governed by and construed in all respects in accordance with the Laws of
the State of Arkansas without regard to any conflict of Laws or choice of Law principles that might otherwise refer construction
or interpretation of this Agreement to the substantive Law of another jurisdiction.
(b)
Each party hereto agrees that it will bring any action or proceeding in respect of any claim arising out of or related to this
Agreement or the transactions contemplated hereby exclusively in any federal or state court of competent jurisdiction located
in the State of Arkansas (the “Chosen Courts”), and, solely in connection with claims arising under this Agreement
or the transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen
Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection
that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party, and (iv) agrees that service of process
upon such party in any such action or proceeding will be effective if notice is given in accordance with Section 5.3.
(c)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES
AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH
PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
5.7.
5.8.
Amendment; Waiver. To the extent permitted by Law, this Agreement may be amended or waived by a subsequent writing signed
by each of the parties hereto upon the approval of each of the parties hereto.
5.9.
Enforcement of Agreement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions
of this Agreement was not performed in accordance with its specific terms or was otherwise breached and that money damages would
be both incalculable and an insufficient remedy for any breach of this Agreement. It is accordingly agreed that the parties hereto
shall be entitled, without the requirement of posting bond, to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction,
this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto waives any
defense in any action for specific performance that a remedy at law would be adequate.
5.10.
Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions
of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
5.11.
Assignment. Except as expressly contemplated hereby, neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto (whether by operation of Law or otherwise) without the prior written consent of
the other parties hereto. Any purported assignment in contravention hereof shall be null and void. Subject to the preceding sentences,
this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors
and assigns.
5.12.
No Third Party Beneficiaries. Nothing in this Agreement (including the documents and instruments referred to herein) expressed
or implied, is intended to confer upon any Person, other than the parties hereto or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement. The representations and warranties in this Agreement are the
product of negotiations among the parties hereto and are for the sole benefit of the parties hereto. Any inaccuracies in such
representations and warranties are subject to waiver by the parties hereto in accordance herewith without notice or liability
to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among
the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently,
Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement as characterizations
of actual facts or circumstances as of the date of this Agreement
or as of any other date. Notwithstanding any other provision
hereof to the contrary, no Consent, approval or agreement of any third party beneficiary will be required to amend, modify to
waive any provision of this Agreement.
5.13.
Individual Capacity. The Individual is signing this Agreement solely in his or her capacity as a Beneficial Owner of Seller
Common Stock, and nothing herein shall prohibit, prevent or preclude the Individual from taking or not taking any action in the
Individual’s capacity as an [officer][director] of Seller to the extent permitted by the Merger Agreement.
[Remainder of
this page intentionally left blank]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed (where applicable, by their respective officers or
other authorized Person thereunto duly authorized) as of the date first written above.
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SIMMONS
FIRST NATIONAL CORPORATION
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By:
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Name:
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Title:
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SPIRIT
OF TEXAS BANCSHARES, INC.
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By:
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Name:
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Title:
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INDIVIDUAL
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Name:
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[Signature
Page to Support Agreement]
Schedule
1
Number of Existing
Shares and Notice Information
Address for notice:
Name:
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Street:
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City, State:
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ZIP Code:
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Telephone:
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Fax:
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Email:
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Schedule
2
[None.]
Annex
C
November 18,
2021
Board of Directors
Spirit of Texas
Bancshares, Inc.
1836 Spirit
of Texas Way
Conroe, Texas
77301
Dear Members
of the Board:
We
have acted as your financial advisor in connection with the proposed merger of Spirit of Texas Bancshares, Inc. (the “Company”)
with and into Simmons First National Corporation (the “Buyer”) (collectively, the “Transaction”). You
have requested that we provide our opinion (the “Opinion”) as investment bankers as to whether the consideration to
be received in the Transaction by the common stockholders of the Company (solely in their capacity as such, the “Shareholders”)
is fair to them from a financial point of view.
Pursuant
to the Agreement and Plan of Merger (the “Agreement”) to be entered into by and between the Company and the Buyer,
and subject to the terms, conditions and limitations set forth therein, we understand that collectively the Shareholders and restricted
stock unit holders are expected, in exchange for the outstanding common stock and restricted stock units of the Company, to receive
approximately 17.9 million shares of the Buyer’s common stock, which is being calculated based upon an agreed maximum number
of such shares (18,325,000 shares) reduced by a number of shares the value of which equals the cash (expected to be approximately
$15 million) to be paid to owners of outstanding options and warrants issued by the Company, subject to other potential adjustments
as described in the Agreement. The terms and conditions of the Transaction are more fully set forth in the Agreement.
In
connection with developing our Opinion we have:
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(i)
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reviewed
certain publicly available financial statements and reports regarding the Company and
the Buyer;
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(ii)
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reviewed
certain audited financial statements regarding the Company and the Buyer;
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(iii)
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reviewed
certain internal financial statements, management reports and other financial and operating
data concerning the Company and the Buyer prepared by management of the Company and the
Buyer, respectively;
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(iv)
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reviewed,
on a pro forma basis, in reliance upon consensus research estimates and upon financial
projections and other information and assumptions concerning the Company and the Buyer,
provided by the management teams of the Company and the Buyer, respectively, the effect
of the Transaction on the balance sheet, capitalization ratios, earnings and tangible
book value both in the aggregate and, where applicable, on a per share basis of the Buyer;
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(v)
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reviewed
the reported prices and trading activity for the common stock of the Company and the
Buyer;
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(vi)
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compared
the financial performance of the Company and the Buyer with that of certain other publicly-traded
companies and their securities that we deemed relevant to our analysis of the Transaction;
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(vii)
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reviewed
the financial terms, to the extent publicly available, of certain merger or acquisition
transactions that we deemed relevant to our analysis of the Transaction;
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(viii)
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reviewed
the most recent draft of the Agreement and related documents provided to us by the Company;
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(ix)
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discussed
with management of the Company the operations of and future business prospects for the
Company and the Buyer and the anticipated financial consequences of the Transaction to
the Company and the Buyer;
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(x)
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assisted
in your deliberations regarding the material terms of the Transaction and your negotiations
with the Buyer; and
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(xi)
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performed
such other analyses and provided such other services as we have deemed appropriate.
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We
have relied on the accuracy and completeness of the information, financial data and financial forecasts provided to us by the
Company and the Buyer and of the other information reviewed by us in connection with the preparation of our Opinion, and our Opinion
is based upon such information. We have not independently verified or undertaken any responsibility to independently verify the
accuracy or completeness of any of such information, data or forecasts. The managements of the Company and the Buyer have assured
us that they are not aware of any relevant information that has been omitted or remains undisclosed to us. We have not assumed
any responsibility for making or undertaking an independent evaluation or appraisal of any of the assets or liabilities of the
Company or of the Buyer, and we have not been furnished with any such evaluations or appraisals; nor have we evaluated the solvency
or fair value of the Company or of the Buyer under any laws relating to bankruptcy, insolvency or similar matters. We have not
assumed any obligation to conduct any physical inspection of the properties, facilities, assets or liabilities (contingent or
otherwise) of the Company or Buyer. We have not received or reviewed any individual loan or credit files nor have we made an independent
evaluation of the adequacy of the allowance for loan and lease losses of the Company or the Buyer. We have not made an independent
analysis of the effects of the COVID-19 pandemic or related market developments or disruptions, or of any other disaster or adversity,
on the business or prospects of the Company or the Buyer. With respect to the financial forecasts prepared by the Company and
the Buyer, including the forecasts of potential cost savings and potential synergies, we have also assumed that such financial
forecasts have been reasonably prepared and reflect the best currently available estimates and judgments of the managements of
the Company and the Buyer as to the future financial performance of the Company and the Buyer and provide a reasonable basis for
our analysis. We recognize that such financial forecasts are based on numerous variables, assumptions and judgments that are inherently
uncertain (including, without limitation, factors related to general economic and competitive conditions) and that actual results
could vary significantly from such forecasts, and we express no opinion as to the reliability of such financial projections and
estimates or the assumptions upon which they are based.
As
part of our investment banking business, we regularly issue fairness opinions and are continually engaged in the valuation of
companies and their securities in connection with business reorganizations, private placements, negotiated underwritings, mergers
and acquisitions and valuations for estate, corporate and other purposes. We are familiar with the Company. We issue periodic
research reports regarding the business activities and prospects of the Company, and we make a market in the common stock of the
Company. We have not received fees for providing investment banking or other services to the Company within the past two years;
however, just over two years ago, we served as financial advisor to the Company in connection with its acquisition of Chandler
Bancorp, Inc., for which we received customary fees. We serve as financial adviser to the
Company in connection with the Transaction,
and we are entitled to receive from the Company reimbursement of our expenses and a fee for our services as financial adviser
to the Company, a significant portion of which is contingent upon the consummation of the Transaction. We are also entitled to
receive a fee from the Company for providing our Opinion to the Board of Directors of the Company. The Company has also agreed
to indemnify us for certain liabilities arising out of our engagement, including certain liabilities that could arise out of our
providing this Opinion letter. We expect to pursue future investment banking services assignments with the participants in this
Transaction. In the ordinary course of business, Stephens Inc. and its affiliates and employees at any time may hold long or short
positions, and may trade or otherwise effect transactions as principal or for the accounts of customers, in debt, equity or derivative
securities of any participants in the Transaction. We are also familiar with the Buyer. We regularly provide investment banking
and other services to the Buyer and have received customary fees from the Buyer for providing such services within the past two
years. We issue periodic research reports regarding the business activities and prospects of the Buyer, and we make a market in
the common stock of the Buyer. During the two years preceding the date of this letter, we served as financial advisor to the Buyer
in connection with its acquisitions of Landmark Community Bank and Triumph Bancshares, Inc. and the sale by the Buyer of five
locations to the Company, and we received customary fees in connection with such transactions, and, just over two years ago, we
served as financial advisor to the Buyer in connection with its acquisition of Landrum Company, for which we also received customary
fees.
We
are not legal, accounting, regulatory, or tax experts, and we have relied solely, and without independent verification, on the
assessments of the Company and its other advisors with respect to such matters. We have assumed, with your consent, that the Transaction
will not result in any materially adverse legal, regulatory, accounting or tax consequences for the Company or its shareholders
and that any reviews of legal, accounting, regulatory or tax issues conducted as a result of the Transaction will be resolved
favorably to the Company and its shareholders. We do not express any opinion as to any tax or other consequences that might result
from the Transaction.
The
Opinion is necessarily based upon market, economic and other conditions as they exist and can be evaluated on the date hereof,
and on the information made available to us as of the date hereof. It should be understood that subsequent developments may affect
this Opinion and that we do not have any obligation to update, revise or reaffirm this Opinion or otherwise comment on events
occurring after the date hereof. We further note that the current volatility and disruption in the credit and financial markets
relating to, among other things, the COVID-19 pandemic, may or may not have an effect of the Company or the Buyer, and we are
not expressing an opinion as to the effects of such volatility or such disruption on the Transaction or any party to the Transaction.
We further express no opinion as to the prices at which shares of the Buyer’s or Company’s common stock may trade
at any time subsequent to the announcement of the Transaction.
In
connection with developing this Opinion, we have assumed that, in all respects material to our analyses:
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(viii)
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the
Transaction and any related transactions will be consummated on the terms of the latest
draft of the Agreement provided to us, without material waiver or modification;
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(ix)
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the
representations and warranties of each party in the Agreement and in all related documents
and instruments referred to in the Agreement are true and correct;
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(x)
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each
party to the Agreement and all related documents will perform all of the covenants and
agreements required to be performed by such party under such documents;
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(xi)
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all
conditions to the completion of the Transaction will be satisfied within the time frames
contemplated by the Agreement without any waivers;
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(xii)
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that
in the course of obtaining the necessary regulatory, lending or other consents or approvals
(contractual or otherwise) for the Transaction and any related transactions, no restrictions,
including any divestiture requirements or amendments or modifications, will be imposed
that would have a material adverse effect on the contemplated benefits of the Transaction
to the Shareholders;
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(xiii)
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there
has been no material change in the assets, liabilities, financial condition, results
of operations, business or prospects of the Company or the Buyer since the date of the
most recent financial statements made available to us, and that no legal, political,
economic, regulatory or other development has occurred that will adversely impact the
Company or the Buyer; and
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(xiv)
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the
Transaction will be consummated in a manner that complies with applicable law and regulations.
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This
Opinion is directed to, and is for the use and benefit of, the Board of Directors of the Company (in its capacity as such) solely
for purposes of assisting with its evaluation of the Transaction. Our Opinion does not address the merits of the underlying decision
by the Company to engage in the Transaction, the merits of the Transaction as compared to other alternatives potentially available
to the Company or the relative effects of any alternative transaction in which the Company might engage, nor is it intended to
be a recommendation to any person or entity as to any specific action that should be taken in connection with the Transaction,
including with respect to how to vote or act with respect to the Transaction. This Opinion is not intended to confer any rights
or remedies upon any other person or entity. In addition, except as explicitly set forth in this letter, you have not asked us
to address, and this Opinion does not address, the fairness to, or any other consideration of, the holders of any class of securities,
creditors or other constituencies of the Company. We have not been asked to express any opinion, and do not express any opinion,
as to the fairness of the amount or nature of the compensation to any of the Company’s officers, directors or employees,
or to any group of such officers, directors or employees, whether relative to the compensation to other shareholders of the Company
or otherwise.
Our
Fairness Opinion Committee has approved the Opinion set forth in this letter. Neither this Opinion nor its substance may be disclosed
by you to anyone other than your advisors without our written permission. Notwithstanding the foregoing, this Opinion and a summary
discussion of our underlying analyses and role as financial adviser to the Company may be included in communications to shareholders
of the Company, provided that this Opinion letter is reproduced in its entirety, and we approve of the content of such disclosures
prior to any filing, distribution or publication of such shareholder communications and prior to distribution of any amendments
thereto.
Based
on the foregoing and our general experience as investment bankers, and subject to the limitations, assumptions and qualifications
stated herein, we are of the opinion, on the date hereof, that the consideration to be received by the Shareholders in the Transaction
is fair to them from a financial point of view.
Very truly yours,
STEPHENS INC.
/s/ STEPHENS
INC.
annex
D
DISSENTERS’
RIGHTS PROVISIONS
TITLE
1 OF THE TEXAS BUSINESS ORGANIZATIONS CODE
CHAPTER
10. MERGERS, INTEREST EXCHANGES,
CONVERSIONS,
AND SALES OF ASSETS
SUBCHAPTER
H. RIGHTS OF DISSENTING OWNERS
Sec.
10.351. APPLICABILITY OF SUBCHAPTER.
(a) This
subchapter does not apply to a fundamental business transaction of a domestic entity if, immediately before the effective date
of the fundamental business transaction, all of the ownership interests of the entity otherwise entitled to rights to dissent
and appraisal under this code are held by one owner or only by the owners who approved the fundamental business transaction.
(b) This
subchapter applies only to a “domestic entity subject to dissenters’ rights,” as defined in Section 1.002. That
term includes a domestic for-profit corporation, professional corporation, professional association, and real estate investment
trust. Except as provided in Subsection (c), that term does not include a partnership or limited liability company.
(c) The
governing documents of a partnership or a limited liability company may provide that its owners are entitled to the rights of
dissent and appraisal provided by this subchapter, subject to any modification to those rights as provided by the entity’s
governing documents.
Sec. 10.352. DEFINITIONS.
In this
subchapter:
(1) “Dissenting
owner” means an owner of an ownership interest in a domestic entity subject to dissenters’ rights who:
(A) provides
notice under Section 10.356; and
(B) complies
with the requirements for perfecting that owner’s right to dissent under this subchapter.
(2) “Responsible
organization” means:
(A) the organization
responsible for:
(i) the
provision of notices under this subchapter; and
(ii) the
primary obligation of paying the fair value for an ownership interest held by a dissenting owner;
(B) with
respect to a merger or conversion:
(i) for
matters occurring before the merger or conversion, the organization that is merging or converting; and
(ii) for
matters occurring after the merger or conversion, the surviving or new organization that is primarily obligated for the payment
of the fair value of the dissenting owner’s ownership interest in the merger or conversion;
(C) with
respect to an interest exchange, the organization the ownership interests of which are being acquired in the interest exchange;
(D) with
respect to the sale of all or substantially all of the assets of an organization, the organization the assets of which are to
be transferred by sale or in another manner; and
(E) with
respect to an amendment to a domestic for-profit corporation’s certificate of formation described by Section 10.354(a)(1)(G),
the corporation.
Sec. 10.353. FORM AND
VALIDITY OF NOTICE.
(a) Notice
required under this subchapter:
(1) must
be in writing; and
(2) may be
mailed, hand-delivered, or delivered by courier or electronic transmission.
(b) Failure
to provide notice as required by this subchapter does not invalidate any action taken.
Sec. 10.354. RIGHTS
OF DISSENT AND APPRAISAL.
(a) Subject
to Subsection (b), an owner of an ownership interest in a domestic entity subject to dissenters’ rights is entitled to:
(1) dissent
from:
(A) a plan
of merger to which the domestic entity is a party if owner approval is required by this code and the owner owns in the domestic
entity an ownership interest that was entitled to vote on the plan of merger;
(B) a sale
of all or substantially all of the assets of the domestic entity if owner approval is required by this code and the owner owns
in the domestic entity an ownership interest that was entitled to vote on the sale;
(C) a plan
of exchange in which the ownership interest of the owner is to be acquired;
(D) a plan
of conversion in which the domestic entity is the converting entity if owner approval is required by this code and the owner owns
in the domestic entity an ownership interest that was entitled to vote on the plan of conversion;
(E) a merger
effected under Section 10.006 in which:
(i) the owner
is entitled to vote on the merger; or
(ii) the
ownership interest of the owner is converted or exchanged;
(F) a merger
effected under Section 21.459(c) in which the shares of the shareholders are converted or exchanged; or
(G) if
the owner owns shares that were entitled to vote on the amendment, an amendment to a domestic for-profit corporation’s certificate
of formation to:
(i) add the
provisions required by Section 3.007(e) to elect to be a public benefit corporation; or
(ii) delete
the provisions required by Section 3.007(e), which in effect cancels the corporation’s election to be a public benefit corporation;
and
(2) subject
to compliance with the procedures set forth in this subchapter, obtain the fair value of that ownership interest through an appraisal.
(b) Notwithstanding
Subsection (a), subject to Subsection (c), an owner may not dissent from a plan of merger or conversion in which there is a single
surviving or new domestic entity or non-code organization, or from a plan of exchange, if:
(1) the ownership
interest, or a depository receipt in respect of the ownership interest, held by the owner:
(A) in
the case of a plan of merger, conversion, or exchange, other than a plan of merger pursuant to Section 21.459(c), is part of a
class or series of ownership interests, or depository receipts in respect of ownership interests, that , on the record date set
for purposes of determining which owners are entitled to vote on the plan of merger, conversion, or exchange, as appropriate,
are either:
(i) listed
on a national securities exchange; or
(ii) held
of record by at least 2,000 owners; or
(B) in
the case of a plan of merger pursuant to Section 21.459(c), is part of a class or series of ownership interests, or depository
receipts in respect of ownership interests, that, immediately before the date the board of directors of the corporation that issued
the ownership interest held, directly or indirectly, by the owner approves the plan of merger, are either:
(i) listed
on a national securities exchange; or
(ii) held
of record by at least 2,000 owners;
(2) the owner
is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner’s ownership
interest any consideration that is different from the consideration to be provided to any other holder of an ownership interest
of the same class or series as the ownership interest held by the owner, other than cash instead of fractional shares or interests
the owner would otherwise be entitled to receive; and
(3) the owner
is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner’s ownership
interest any consideration other than:
(A) ownership
interests, or depository receipts in respect of ownership interests, of a domestic entity or non-code organization of the same
general organizational type that, immediately after the effective date of the merger, conversion, or exchange, as appropriate,
will be part of a class or series of ownership interests, or depository receipts in respect of ownership interests, that are:
(i) listed
on a national securities exchange or authorized for listing on the exchange on official notice of issuance; or
(ii) held
of record by at least 2,000 owners;
(B) cash
instead of fractional ownership interests, or fractional depository receipts in respect of ownership interests, the owner would
otherwise be entitled to receive; or
(C) any
combination of the ownership interests, or fractional depository receipts in respect of ownership interests, and cash described
by Paragraphs (A) and (B).
(c) Subsection
(b) shall not apply to a domestic entity that is a subsidiary with respect to a merger under Section 10.006.
(d) Notwithstanding
Subsection (a), an owner of an ownership interest in a domestic for-profit corporation subject to dissenters’ rights may
not dissent from an amendment to the corporation’s certificate of formation described by Subsection (a)(1)(G) if the shares
held by the owner are part of a class or series of shares, on the record date set for purposes of determining which owners are
entitled to vote on the amendment:
(1) listed
on a national securities exchange; or
(2) held
of record by at least 2,000 owners.
Sec. 10.355. NOTICE
OF RIGHT OF DISSENT AND APPRAISAL.
(a) A domestic
entity subject to dissenters’ rights that takes or proposes to take an action regarding which an owner has a right to dissent
and obtain an appraisal under Section 10.354 shall notify each affected owner of the owner’s rights under that section if:
(1) the action
or proposed action is submitted to a vote of the owners at a meeting; or
(2) approval
of the action or proposed action is obtained by written consent of the owners instead of being submitted to a vote of the owners.
(b) If
a parent organization effects a merger under Section 10.006 and a subsidiary organization that is a party to the merger is a domestic
entity subject to dissenters’ rights, the responsible organization shall notify the owners of that subsidiary organization
who have a right to dissent to the merger under Section 10.354 of their rights under this subchapter not later than the 10th day
after the effective date of the merger. The notice must also include a copy of the certificate of merger and a statement that
the merger has become effective.
(b-1) If
a corporation effects a merger under Section 21.459(c), the responsible organization shall notify the shareholders of that corporation
who have a right to dissent to the plan of merger under Section 10.354 of their rights under this subchapter not later than the
10th day after the effective date of the merger. Notice required under this subsection that is given to shareholders before the
effective date of the merger may, but is not required to, contain a statement of the merger’s effective date. If the notice
is not given to the shareholders until on or after the effective date of the merger, the notice must contain a statement of the
merger’s effective date.
(c) A notice
required to be provided under Subsection (a), (b), or (b-1) must:
(1) be accompanied
by a copy of this subchapter; and
(2) advise
the owner of the location of the responsible organization’s principal executive offices to which a notice required under
Section 10.356(b)(1) or a demand under Section 10.356(b)(3), or both, may be provided.
(d) In
addition to the requirements prescribed by Subsection (c), a notice required to be provided:
(1) under
Subsection (a)(1) must accompany the notice of the meeting to consider the action;
(2) under
Subsection (a)(2) must be provided to:
(A) each
owner who consents in writing to the action before the owner delivers the written consent; and
(B) each
owner who is entitled to vote on the action and does not consent in writing to the action before the 11th day after the date the
action takes effect; and
(3) under
Subsection (b-1) must be provided:
(A) if
given before the consummation of the offer described by Section 21.459(c)(2), to each shareholder to whom that offer is made;
or
(B) if
given after the consummation of the offer described by Section 21.459(c)(2), to each shareholder who did not tender the shareholder’s
shares in that offer.
(e) Not
later than the 10th day after the date an action described by Subsection (a)(1) takes effect, the responsible organization shall
give notice that the action has been effected to each owner who voted against the action and sent notice under Section 10.356(b)(1).
(f) If
the notice given under Subsection (b-1) did not include a statement of the effective date of the merger, the responsible organization
shall, not later than the 10th day after the effective date, give a second notice to the shareholders notifying them of the merger’s
effective date. If the second notice is given after the later of the date on which the offer described by Section 21.459(c)(2)
is consummated or the 20th day after the date notice under Subsection (b-1) is given, then the second notice is required to be
given to only those shareholders who have made a demand under Section 10.356(b)(3).
Sec. 10.356. PROCEDURE
FOR DISSENT BY OWNERS AS TO ACTIONS; PERFECTION OF RIGHT OF DISSENT AND APPRAISAL.
(a) An
owner of an ownership interest of a domestic entity subject to dissenters’ rights who has the right to dissent and appraisal
from any of the actions referred to in Section 10.354 may exercise that right to dissent and appraisal only by complying with
the procedures specified in this subchapter. An owner’s right of dissent and appraisal under Section 10.354 may be exercised
by an owner only with respect to an ownership interest that is not voted in favor of the action.
(b) To
perfect the owner’s rights of dissent and appraisal under Section 10.354, an owner:
(1) if the
proposed action is to be submitted to a vote of the owners at a meeting, must give to the domestic entity a written notice of
objection to the action that:
(A) is
addressed to the entity’s president and secretary;
(B) states
that the owner’s right to dissent will be exercised if the action takes effect;
(C) provides
an address to which notice of effectiveness of the action should be delivered or mailed; and
(D) is
delivered to the entity’s principal executive offices before the meeting;
(2) with
respect to the ownership interest for which the rights of dissent and appraisal are sought:
(A) must
vote against the action if the owner is entitled to vote on the action and the action is approved at a meeting of the owners;
and
(B) may
not consent to the action if the action is approved by written consent; and
(3) must
give to the responsible organization a demand in writing that:
(A) is
addressed to the president and secretary of the responsible organization;
(B) demands
payment of the fair value of the ownership interests for which the rights of dissent and appraisal are sought;
(C) provides
to the responsible organization an address to which a notice relating to the dissent and appraisal procedures under this subchapter
may be sent;
(D) states
the number and class of the ownership interests of the domestic entity owned by the owner and the fair value of the ownership
interests as estimated by the owner; and
(E) is
delivered to the responsible organization at its principal executive offices at the following time:
(i) not later
than the 20th day after the date the responsible organization sends to the owner the notice required by Section 10.355(e) that
the action has taken effect, if the action was approved by a vote of the owners at a meeting;
(ii) not
later than the 20th day after the date the responsible organization sends to the owner the notice required by Section 10.355(d)(2)
that the action has taken effect, if the action was approved by the written consent of the owners;
(iii) not
later than the 20th day after the date the responsible organization sends to the owner a notice that the merger was effected,
if the action is a merger effected under Section 10.006; or
(iv) not
later than the 20th day after the date the responsible organization gives to the shareholder the notice required by Section 10.355(b-1)
or the date of the consummation of the offer described by Section 21.459(c)(2), whichever is later, if the action is a merger
effected under Section 21.459(c).
(c) An
owner who does not make a demand within the period required by Subsection (b)(3)(E) or, if Subsection (b)(1) is applicable, does
not give the notice of objection before the meeting of the owners is bound by the action and is not entitled to exercise the rights
of dissent and appraisal under Section 10.354.
(d) Not
later than the 20th day after the date an owner makes a demand under Subsection (b)(3), the owner must submit to the responsible
organization any certificates representing the ownership interest to which the demand relates for purposes of making a notation
on the certificates that a demand for the payment of the fair value of an ownership interest has been made under this section.
An owner’s failure to submit the certificates within the required period has the effect of terminating, at the option of
the responsible organization, the owner’s rights to dissent and appraisal under Section 10.354 unless a court, for good
cause shown, directs otherwise.
(e) If
a domestic entity and responsible organization satisfy the requirements of this subchapter relating to the rights of owners of
ownership interests in the entity to dissent to an action and seek appraisal of those ownership interests, an owner of an ownership
interest who fails to perfect that owner’s right of dissent in accordance with this subchapter may not bring suit to recover
the value of the ownership interest or money damages relating to the action.
Sec. 10.357. WITHDRAWAL
OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.
(a) An
owner may withdraw a demand for the payment of the fair value of an ownership interest made under Section 10.356 before:
(1) payment
for the ownership interest has been made under Sections 10.358 and 10.361; or
(2) a petition
has been filed under Section 10.361.
(b) Unless
the responsible organization consents to the withdrawal of the demand, an owner may not withdraw a demand for payment under Subsection
(a) after either of the events specified in Subsections (a)(1) and (2).
Sec. 10.358. RESPONSE
BY ORGANIZATION TO NOTICE OF DISSENT AND DEMAND FOR FAIR VALUE BY DISSENTING OWNER.
(a) Not
later than the 20th day after the date a responsible organization receives a demand for payment made by a dissenting owner in
accordance with Section 10.356(b)(3), the responsible organization shall respond to the dissenting owner in writing by:
(1) accepting
the amount claimed in the demand as the fair value of the ownership interests specified in the notice; or
(2) rejecting
the demand and including in the response the requirements prescribed by Subsection (c).
(b) If
the responsible organization accepts the amount claimed in the demand, the responsible organization shall pay the amount not later
than the 90th day after the date the action that is the subject of the demand was effected if the owner delivers to the responsible
organization:
(1) endorsed
certificates representing the ownership interests if the ownership interests are certificated; or
(2) signed
assignments of the ownership interests if the ownership interests are uncertificated.
(c) If
the responsible organization rejects the amount claimed in the demand, the responsible organization shall provide to the owner:
(1) an estimate
by the responsible organization of the fair value of the ownership interests; and
(2) an offer
to pay the amount of the estimate provided under Subdivision (1).
(d) If
the dissenting owner decides to accept the offer made by the responsible organization under Subsection (c)(2), the owner must
provide to the responsible organization notice of the acceptance of the offer not later than the 90th day after the date the action
that is the subject of the demand took effect.
(e) If,
not later than the 90th day after the date the action that is the subject of the demand took effect, a dissenting owner accepts
an offer made by a responsible organization under Subsection (c)(2) or a dissenting owner and a responsible organization reach
an agreement on the fair value of the ownership interests, the responsible organization shall pay the agreed amount not later
than the 120th day after the date the action that is the subject of the demand took effect, if the dissenting owner delivers to
the responsible organization:
(1) endorsed
certificates representing the ownership interests if the ownership interests are certificated; or
(2) signed
assignments of the ownership interests if the ownership interests are uncertificated.
Sec. 10.359. RECORD
OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.
(a) A responsible
organization shall note in the organization’s ownership interest records maintained under Section 3.151 the receipt of a
demand for payment from any dissenting owner made under Section 10.356.
(b) If
an ownership interest that is the subject of a demand for payment made under Section 10.356 is transferred, a new certificate
representing that ownership interest must contain:
(1) a reference
to the demand; and
(2) the name
of the original dissenting owner of the ownership interest.
Sec. 10.360. RIGHTS
OF TRANSFEREE OF CERTAIN OWNERSHIP INTEREST.
A transferee
of an ownership interest that is the subject of a demand for payment made under Section 10.356 does not acquire additional rights
with respect to the responsible organization following the transfer. The transferee has only the rights the original dissenting
owner had with respect to the responsible organization after making the demand.
Sec. 10.361. PROCEEDING
TO DETERMINE FAIR VALUE OF OWNERSHIP INTEREST AND OWNERS ENTITLED TO PAYMENT; APPOINTMENT OF APPRAISERS.
(a) If
a responsible organization rejects the amount demanded by a dissenting owner under Section 10.358 and the dissenting owner and
responsible organization are unable to reach an agreement relating to the fair value of the ownership interests within the period
prescribed by Section 10.358(d), the dissenting owner or responsible organization may file a petition requesting a finding and
determination of the fair value of the owner’s ownership interests in a court in:
(1) the county
in which the organization’s principal office is located in this state; or
(2) the county
in which the organization’s registered office is located in this state, if the organization does not have a business office
in this state.
(b) A petition
described by Subsection (a) must be filed not later than the 60th day after the expiration of the period required by Section 10.358(d).
(c) On
the filing of a petition by an owner under Subsection (a), service of a copy of the petition shall be made to the responsible
organization. Not later than the 10th day after the date a responsible organization receives service under this subsection, the
responsible organization shall file with the clerk of the court in which the petition was filed a list containing the names and
addresses of each owner of the organization who has demanded payment for ownership interests under Section 10.356 and with whom
agreement as to the value of the ownership interests has not been reached with the responsible organization. If the responsible
organization files a petition under Subsection (a), the petition must be accompanied by this list.
(d) The
clerk of the court in which a petition is filed under this section shall provide by registered mail notice of the time and place
set for the hearing to:
(1) the responsible
organization; and
(2) each
owner named on the list described by Subsection (c) at the address shown for the owner on the list.
(e) The
court shall:
(1) determine
which owners have:
(A) perfected
their rights by complying with this subchapter; and
(B) become
subsequently entitled to receive payment for the fair value of their ownership interests; and
(2) appoint
one or more qualified appraisers to determine the fair value of the ownership interests of the owners described by Subdivision
(1).
(f) The
court shall approve the form of a notice required to be provided under this section. The judgment of the court is final and binding
on the responsible organization, any other organization obligated to make payment under this subchapter for an ownership interest,
and each owner who is notified as required by this section.
(g) The
beneficial owner of an ownership interest subject to dissenters’ rights held in a voting trust or by a nominee on the beneficial
owner’s behalf may file a petition described by Subsection (a) if no agreement between the dissenting owner of the ownership
interest and the responsible organization has been reached within the period prescribed by Section 10.358(d). When the beneficial
owner files a petition described by Subsection (a):
(1) the beneficial
owner shall at that time be considered, for purposes of this subchapter, the owner, the dissenting owner, and the holder of the
ownership interest subject to the petition; and
(2) the dissenting
owner who demanded payment under Section 10.356 has no further rights regarding the ownership interest subject to the petition.
Sec. 10.362. COMPUTATION
AND DETERMINATION OF FAIR VALUE OF OWNERSHIP INTEREST.
(a) For
purposes of this subchapter, the fair value of an ownership interest of a domestic entity subject to dissenters’ rights
is the value of the ownership interest on the date preceding the date of the action that is the subject of the appraisal. Any
appreciation or depreciation in the value of the ownership interest occurring in anticipation of the proposed action or as a result
of the action must be specifically excluded from the computation of the fair value of the ownership interest.
(b) In
computing the fair value of an ownership interest under this subchapter, consideration must be given to the value of the domestic
entity as a going concern without including in the computation of value any control premium, any minority ownership discount,
or any discount for lack of marketability. If the domestic entity has different classes or series of ownership interests, the
relative rights and preferences of and limitations placed on the class or series of ownership interests, other than relative voting
rights, held by the dissenting owner must be taken into account in the computation of value.
(c) The
determination of the fair value of an ownership interest made for purposes of this subchapter may not be used for purposes of
making a determination of the fair value of that ownership interest for another purpose or of the fair value of another ownership
interest, including for purposes of determining any minority or liquidity discount that might apply to a sale of an ownership
interest.
Sec. 10.363. POWERS
AND DUTIES OF APPRAISER; APPRAISAL PROCEDURES.
(a) An
appraiser appointed under Section 10.361 has the power and authority that:
(1) is granted
by the court in the order appointing the appraiser; and
(2) may be
conferred by a court to a master in chancery as provided by Rule 171, Texas Rules of Civil Procedure.
(b) The
appraiser shall:
(1) determine
the fair value of an ownership interest of an owner adjudged by the court to be entitled to payment for the ownership interest;
and
(2) file
with the court a report of that determination.
(c) The
appraiser is entitled to examine the books and records of a responsible organization and may conduct investigations as the appraiser
considers appropriate. A dissenting owner or responsible organization may submit to an appraiser evidence or other information
relevant to the determination of the fair value of the ownership interest required by Subsection (b)(1).
(d) The
clerk of the court appointing the appraiser shall provide notice of the filing of the report under Subsection (b) to each dissenting
owner named in the list filed under Section 10.361 and the responsible organization.
Sec. 10.364. OBJECTION
TO APPRAISAL; HEARING.
(a) A dissenting
owner or responsible organization may object, based on the law or the facts, to all or part of an appraisal report containing
the fair value of an ownership interest determined under Section 10.363(b).
(b) If
an objection to a report is raised under Subsection (a), the court shall hold a hearing to determine the fair value of the ownership
interest that is the subject of the report. After the hearing, the court shall require the responsible organization to pay to
the holders of the ownership interest the amount of the determined value with interest, accruing from the 91st day after the date
the applicable action for which the owner elected to dissent was effected until the date of the judgment.
(c) Interest
under Subsection (b) accrues at the same rate as is provided for the accrual of prejudgment interest in civil cases.
(d) The
responsible organization shall:
(1) immediately
pay the amount of the judgment to a holder of an uncertificated ownership interest; and
(2) pay the
amount of the judgment to a holder of a certificated ownership interest immediately after the certificate holder surrenders to
the responsible organization an endorsed certificate representing the ownership interest.
(e) On
payment of the judgment, the dissenting owner does not have an interest in the:
(1) ownership
interest for which the payment is made; or
(2) responsible
organization with respect to that ownership interest.
Sec. 10.365. COURT
COSTS; COMPENSATION FOR APPRAISER.
(a) An
appraiser appointed under Section 10.361 is entitled to a reasonable fee payable from court costs.
(b) All
court costs shall be allocated between the responsible organization and the dissenting owners in the manner that the court determines
to be fair and equitable.
Sec. 10.366. STATUS
OF OWNERSHIP INTEREST HELD OR FORMERLY HELD BY DISSENTING OWNER.
(a) An
ownership interest of an organization acquired by a responsible organization under this subchapter:
(1) in the
case of a merger, conversion, or interest exchange, shall be held or disposed of as provided in the plan of merger, conversion,
or interest exchange; and
(2) in any
other case, may be held or disposed of by the responsible organization in the same manner as other ownership interests acquired
by the organization or held in its treasury.
(b) An
owner who has demanded payment for the owner’s ownership interest under Section 10.356 is not entitled to vote or exercise
any other rights of an owner with respect to the ownership interest except the right to:
(1) receive
payment for the ownership interest under this subchapter; and
(2) bring
an appropriate action to obtain relief on the ground that the action to which the demand relates would be or was fraudulent.
(c) An
ownership interest for which payment has been demanded under Section 10.356 may not be considered outstanding for purposes of
any subsequent vote or action.
Sec. 10.367. RIGHTS
OF OWNERS FOLLOWING TERMINATION OF RIGHT OF DISSENT.
(a) The
rights of a dissenting owner terminate if:
(1) the owner
withdraws the demand under Section 10.356;
(2) the owner’s
right of dissent is terminated under Section 10.356;
(3) a
petition is not filed within the period required by Section 10.361; or
(4) after
a hearing held under Section 10.361, the court adjudges that the owner is not entitled to elect to dissent from an action under
this subchapter.
(b) On
termination of the right of dissent under this section:
(1) the
dissenting owner and all persons claiming a right under the owner are conclusively presumed to have approved and ratified the
action to which the owner dissented and are bound by that action;
(2) the owner’s
right to be paid the fair value of the owner’s ownership interests ceases;
(3) the
owner’s status as an owner of those ownership interests is restored, as if the owner’s demand for payment of the fair
value of the ownership interests had not been made under Section 10.356, if the owner’s ownership interests were not canceled,
converted, or exchanged as a result of the action or a subsequent action;
(4) the dissenting
owner is entitled to receive the same cash, property, rights, and other consideration received by owners of the same class and
series of ownership interests held by the owner, as if the owner’s demand for payment of the fair value of the ownership
interests had not been made under Section 10.356, if the owner’s ownership interests were canceled, converted, or exchanged
as a result of the action or a subsequent action;
(5) any action
of the domestic entity taken after the date of the demand for payment by the owner under Section 10.356 will not be considered
ineffective or invalid because of the restoration of the owner’s ownership interests or the other rights or entitlements
of the owner under this subsection; and
(6) the dissenting
owner is entitled to receive dividends or other distributions made after the date of the owner’s payment demand under Section
10.356, to owners of the same class and series of ownership interests held by the owner as if the demand had not been made, subject
to any change in or adjustment to the ownership interests because of an action taken by the domestic entity after the date of
the demand.
Sec. 10.368. EXCLUSIVITY
OF REMEDY OF DISSENT AND APPRAISAL.
In the
absence of fraud in the transaction, any right of an owner of an ownership interest to dissent from an action and obtain the fair
value of the ownership interest under this subchapter is the exclusive remedy for recovery of: (1) the value of the ownership
interest; or (2) money damages to the owner with respect to the action.
P.O. BOX 8016, CARY, NC 27512-9903
Spirit of Texas Bancshares, Inc.
Special Meeting of Shareholders
For Shareholders as of record on January 14, 2022
TIME: Thursday, February 24, 2022 12:00 PM, Central Time
PLACE: Special Meeting to be held live via the Internet - please visit www.proxydocs.com/STXB for more details
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY:
INTERNETGo To: www.proxypush.com/STXBo Cast your vote onlineo Have your Proxy Card readyo Follow the simple instructions to record your vote
PHONE Call 1-866-437-1228o Use any touch-tone telephoneo Have your Proxy Card readyo Follow the simple recorded instructions
MAILo Mark, sign and date your Proxy Cardo Fold and return your Proxy Card in the postage-paidenvelope provided
Go Green! To receive documents via e-mail, simply go to: www.proxydocs.com/STXB
This proxy is being solicited on behalf of the Board of Directors
The undersigned hereby appoints Jerry D. Golemon and Steven M. Morris, and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to represent and to vote all the shares of capital stock of Spirit of Texas Bancshares, Inc. which the undersigned is entitled to vote at the Special Meeting of Shareholders to be held virtually on February 24, 2022 at 12:00 pm, Local Time, and any adjournment or postponement thereof upon the proposals listed on the reverse side of this card as directed and upon such other matters as may be properly brought before the meeting or any adjournment or postponement thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED
IDENTICAL TO THE BOARD OF DIRECTORS’ RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof.
You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card.
In order to attend the virtual meeting, you must register in advance at www.proxydocs.com/STXB prior to the deadline of February 23, 2022 at 12:00 PM (CT).
PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
Spirit of Texas Bancshares, Inc.
Special Meeting of Shareholders
Please make your marks like this: X
Use dark black pencil or pen only
THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR PROPOSALS 1, 2 AND 3
PROPOSAL YOUR VOTE
FOR AGAINST ABSTAIN
1. to approve the Agreement and Plan of Merger, dated as of November 18, 2021, which we refer to as the merger agreement, by and between Simmons First National Corporation, which we refer to as Simmons, and Spirit of Texas Bancshares, Inc., which we refer to as Spirit, pursuant to which, among other things, Spirit will merge with and into Simmons, with Simmons continuing as the surviving corporation, which we refer to as the merger, as more fully described in the accompanying proxy statement/prospectus, which we refer to as the merger proposal. A copy of the merger agreement is included as Annex A to the accompanying proxy statement/prospectus.
BOARD OF DIRECTORS RECOMMENDS
FOR
2. to approve, on an advisory (non-binding) basis, specified compensation that may become payable to the named executive officers of Spirit in connection with the merger; and
FOR
3. to approve one or more adjournments of the Spirit special meeting, if necessary or appropriate, to solicit additional proxies in favor of approval of the merger proposal.
FOR
You must register to attend the meeting online and/or participate at www.proxydocs.com/STXB
Authorized Signatures - Must be completed for your instructions to be executed.
Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form.
Signature (and Title if applicable) Date
Signature (if held jointly)
Date