The First Bancshares, Inc. (OTCMKTS:FBSI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01

 

Agreement and Plan of Merger

Merger. On December 18, 2019, The First Bancshares, Inc., a Mississippi corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Southwest Georgia Financial Corporation, a Georgia corporation (“SWG”), whereby SWG will be merged with and into the Company (the “Merger”). to and simultaneously with entering into the Merger Agreement, the Company’s wholly owned subsidiary bank, The First, A National Banking Association (“The First”), and SWG’s wholly owned subsidiary bank, Southwest Georgia Bank, entered into a Plan of Merger and Merger Agreement whereby Southwest Georgia Bank will be merged with and into The First immediately following the merger of SWG with and into the Company (the “Bank Merger”).

The Merger Agreement has been unanimously approved by the boards of directors of the Company and SWG. The transaction is expected to close in the second quarter of 2020, subject to customary conditions discussed below.

Merger Consideration. to the Merger Agreement, each outstanding share of SWG common stock issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one (1.00) share of the Company’s common stock (the “Merger Consideration”). Each share of SWG common stock subject to vesting restrictions granted under any equity plan of SWG (“SWG Restricted Shares”), or its subsidiaries, that is outstanding immediately prior to the effective time of the Merger will also automatically be converted into one (1.00) restricted share of the Company’s common stock with the same vesting restrictions as were applicable to the SWG Restricted Share.

Each outstanding share of the Company’s common stock shall remain outstanding and unaffected by the Merger.

Representations and Warranties. The Merger Agreement contains usual and customary representations and warranties that the Company and SWG made to each other as of specific dates.

Covenants; No Solicitation. Each party also has agreed to customary covenants, including, among others, covenants relating to the conduct of its business during the interim period between the execution of the Merger Agreement and the consummation of the Merger. Additionally, SWG has agreed (i) not to initiate, solicit, induce or knowingly encourage or take any action or facilitate any alternative acquisition transaction or, subject to certain exceptions, participate in discussions or negotiations regarding, or furnish any non-public information relating to, any alternative acquisition transaction or (ii) subject to certain exceptions, not to withdraw or modify in a manner adverse to the Company, the recommendation of the SWG board of directors that SWG’s shareholders approve the Merger Agreement and the Merger. In the event that SWG receives a proposal with respect to an alternative acquisition transaction that the SWG board of directors determines is superior to the Merger, the Company will have an opportunity to match the terms of such proposal, subject to certain requirements.

Conditions to Closing. Consummation of the Merger is subject to various customary conditions, including (i) approval of the Merger Agreement and the Merger by shareholders of SWG; (ii) the receipt of certain regulatory approvals and third party consents; (iii) no injunctions or other legal restraints preventing the consummation of the Merger; (iv) the U.S. Securities and Exchange Commission (“SEC”) having declared effective the Company’s registration statement covering the issuance of shares of the Company’s common stock in the Merger; (v) the receipt by each party of a 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 of 1986, as amended; (vi) the accuracy of representations and warranties of the parties and compliance by the parties with their respective covenants and obligations under the Merger Agreement (subject to customary materiality qualifiers); and (vii) the absence of a material adverse effect with respect to the either the Company or SWG.

Termination. The Merger Agreement may be terminated in certain circumstances, including: (i) by mutual written agreement of the parties, (ii) by either party if any regulatory approval required for consummation of the transactions contemplated by the Merger Agreement has been denied by final non-appealable action by the relevant governmental authority or an application for such approval has been permanently withdrawn at the request of a governmental authority, (iii) by either party if the approval of the shareholders of SWG is not obtained, (iv) by either party in the event of a material breach by the other party of any representation, warranty or covenant contained in the Merger Agreement and such breach is not cured within thirty days, (v) by either party if the Merger is not consummated on or before June 30, 2020, subject to automatic extension to August 30, 2020 if the only outstanding closing condition is the receipt of regulatory approvals, (vi) by the Company if SWG’s board of directors breaches its obligation not to solicit any alternative acquisition transaction, changes its recommendation with respect to the Merger in accordance with the terms of the Merger Agreement, or breaches its obligation to call a special SWG shareholder meeting to vote on the Merger; (vii) by SWG in certain circumstances in order to enter into a definitive agreement to accept a superior proposal; or (viii) by SWG in the event that the board of directors of SWG so determines at any time during the five (5) day period commencing prior to the date that is five (5) days prior to the Closing Date (such date that is 5 days prior to the Closing Date being the “Determination Date”), if, and only if, both of the following conditions are satisfied: (A) the number obtained by dividing the average closing price of Company common stock as reported on the NASDAQ Stock Market for the ten (10) consecutive trading days ending on the trading day immediately prior to the Determination Date by $33.58 (the “FBMS Ratio”) is less than 0.80; and (B) the FBMS Ratio is less than the number obtained by (1) dividing the average of the closing price on such date of the KBW Nasdaq Regional Banking Index (KRX) (the “Index Price”) for the ten (10) consecutive trading days ending on the trading day immediately prior to the Determination Date by the Index Price on the date of the Merger Agreement and (2) subtracting 0.20 from such quotient, provided that the Company, subject to certain terms and conditions in the Merger Agreement, will have the opportunity to adjust the Merger Consideration in order to prevent the termination of the Merger Agreement by SWG to this section (viii).

Termination Fee. SWG will pay the Company a termination fee equal to $3.75 million in the event (i) the Merger Agreement is terminated by the Company because SWG’s board of directors breaches its obligation not to solicit any alternative acquisition transaction, changes its recommendation with respect to the Merger in accordance with the terms of the Merger Agreement, or breaches its obligation to call a special SWG shareholder meeting to vote on the Merger, (ii) SWG terminates this agreement in order to accept a superior proposal, or (iii) the Merger Agreement is terminated by the Company because SWG receives an acquisition proposal after the date of the Merger Agreement but before it is terminated, and SWG enters into an agreement for or completes an acquisition transaction within 12 months of the termination of the Merger Agreement.

The foregoing summary of the Merger Agreement is not complete and is qualified in its entirety by reference to the full text of the Merger Agreement and certain exhibits attached thereto, a copy of which is attached hereto as Exhibit 2.1 and incorporated by reference herein.  The assertions embodied in the representations and warranties set forth in the Merger Agreement by each party were made solely for purposes of, and were and are solely for the benefit of the parties to, the contract between the Company and SWG and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating certain terms. Moreover, certain of the representations and warranties are subject to a contractual standard of materiality that may be different from what may be viewed as material to shareholders, and the representations and warranties may have been used to allocate risk between the Company and SWG rather than establishing matters of fact. Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other time, and shareholders should not rely on them as statements of fact. In addition, such representations and warranties (i) will not survive consummation of the Merger, unless otherwise specified in the Merger Agreement, and (ii) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures. Accordingly, the Merger Agreement is included with this filing only to provide shareholders with information regarding the terms of the Merger Agreement, and not to provide shareholders with any other factual information regarding the Company or SWG, their respective affiliates or their respective businesses. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company, its affiliates and their respective businesses, and the information regarding the Merger Agreement and the Merger that will be contained in, or incorporated by reference into, the registration statement on Form S-4 of the Company that will include a proxy statement of SWG and a prospectus of the Company and that will be filed with the Securities and Exchange Commission (the “SEC”).

Voting Agreements

In connection with entering into the Merger Agreement, the directors of SWG have entered into voting agreements (the “Voting Agreements”), to which each such director agreed to vote his, her or its shares of SWG common stock in favor of approval of the Merger Agreement and transactions contemplated therein and against certain other actions, proposals, transactions or agreements that would be detrimental to the consummation of the Merger. The Voting Agreements generally prohibit the sale or transfer of the shares held by each such shareholder until the earlier of (i) termination of the Merger Agreement and (ii) receipt of the approval of the shareholders of SWG. The Voting Agreements terminate upon the earlier of (i) the consummation of the Merger, (ii) the amendment of the Merger Agreement in any manner that materially and adversely affects any rights of the shareholder, (iii) the termination of the Merger Agreement or (iv) two years from the date of the Voting Agreements.

The foregoing summary of the Voting Agreements is qualified in its entirety by reference to the complete text of such documents, forms of which are included as Exhibit A to the Merger Agreement, filed as Exhibit 2.1 attached hereto and which is incorporated herein by reference.

Director Non-Compete Agreements

 

In connection with entering into the Merger Agreement, each of the directors of SWG and Southwest Georgia Bank entered into a Non-Competition and Non-Disclosure Agreement with the Company, which contains provisions related to the non-disclosure of confidential information and trade secrets, non-solicitation of customers with whom such directors had material contact, non-competition within a restricted territory and non-recruitment of employees.

The foregoing summary of the Non-Competition and Non-Disclosure Agreement is qualified in its entirety by reference to the complete text of such document, a form of which is included as Exhibit C to the Merger Agreement, filed as Exhibit 2.1 attached hereto and which is incorporated herein by reference.

On December 18, 2019, the Company and SWG issued a joint press release announcing the execution of the Merger Agreement. The complete text of the press release is attached hereto as Exhibit 99.1. An investor presentation, which will be posted to the Company’s website, is also furnished herewith as Exhibit 99.2. All information included in the press release and the investor presentation is of the date thereof, and the Company does not assume any obligation to correct or update such information in the future.

Cautionary Statements Regarding Forward-Looking Information.

This Current Report contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. In general, forward-looking statements usually use words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology, including statements related to the expected timing of the closing of the Merger, the expected returns and other benefits of the Merger, to shareholders, expected improvement in operating efficiency resulting from the Merger, estimated expense reductions resulting from the transactions and the timing of achievement of such reductions, the impact on and timing of the recovery of the impact on tangible book value, and the effect of the Merger on the Company’s capital ratios. Forward-looking statements represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements.

Factors that could cause or contribute to such differences include, but are not limited to (1) the risk that the cost savings and any revenue synergies from the Merger may not be realized or take longer than anticipated to be realized, (2) disruption from the Merger with customers, suppliers, employee or other business partners relationships, (3) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (4) the risk of successful integration of SWG’s business into the Company, (5) the failure to obtain the necessary approval by the shareholders of SWG, (6) the amount of the costs, fees, expenses and charges related to the Merger, (7) the ability by the Company to obtain required governmental approvals of the Merger, (8) reputational risk and the reaction of each of the companies’ customers, suppliers, employees or other business partners to the Merger, (9) the failure of the closing conditions in the Merger Agreement to be satisfied, or any unexpected delay in closing of the Merger, (10) the risk that the integration of SWG’s operations into the operations of the Company will be materially delayed or will be more costly or difficult than expected, (11) the possibility that the Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (12) the dilution caused by the Company’s issuance of additional shares of its common stock in the Merger transaction, and (13) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in the cautionary language included under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in SWG’s Annual Reports on Form 10-K for the year ended December 31, 2018, and other documents subsequently filed by the Company and SWG with the SEC. Consequently, no forward-looking statement can be guaranteed. Neither the Company nor SWG undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For any forward-looking statements made in this Current Report on Form 8-K, the exhibits hereto or any related documents, the Company and SWG claim protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Additional Information about the Merger and Where to Find It

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  In connection with the proposed Merger, the Company will file with the SEC a registration statement on Form S-4 that will include a proxy statement of SWG and a prospectus of the Company, as well as other relevant documents concerning the proposed transaction. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, SWG AND THE PROPOSED MERGER. The proxy statement/prospectus will be sent to the shareholders of SWG seeking the required shareholder approval. Investors and security holders will be able to obtain free copies of the registration statement on Form S-4 and the related proxy statement/prospectus, when filed, as well as other documents filed with the SEC by the Company and SWG through the web site maintained by the SEC at www.sec.gov. Documents filed with the SEC by the Company will also be available free of charge by directing a written request to The First Bancshares, Inc., 6480 U.S. Highway 98 West, Hattiesburg, Mississippi 39402 Attn: Corporate Secretary, Chandra Kidd. The Company’s telephone number is (601) 268-8998. Documents filed with the SEC by SWG will also be available free of charge by directing a written request to Southwest Georgia Financial Corporation, 25 Second Avenue, S. W., Moultrie, Georgia 31768, Attn: EVP and Chief Administrative Officer, Donna Lott. SWG’s telephone number is (229) 985-1120.

Participants in the Transaction

The Company, SWG and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of SWG in connection with the proposed transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the proxy statement/prospectus regarding the proposed transaction when it becomes available. Additional information about the Company and its directors and officers may be found in the definitive proxy statement of the Company relating to its 2019 Annual Meeting of Stockholders filed with the SEC on April 3, 2019. Additional information about SWG and its directors and officers may be found in the definitive proxy statement of SWG relating to its 2019 Annual Meeting of Stockholders filed with the SEC on April 18, 2019. The definitive proxy statement can be obtained free of charge from the sources described above.

(d) EXHIBITS

2.1	Agreement and Plan of Merger, dated December 18, 2019, by and between The First Bancshares, Inc. and Southwest Georgia Financial Corporation

99.1	Press Release dated December 18, 2019

99.2	Investor Presentation dated December 18, 2019

FIRST BANCSHARES INC /MS/ Exhibit
EX-2.1 2 tm1926495d1_ex2-1.htm EXHIBIT 2.1   Exhibit 2.1   Execution Version   AGREEMENT AND PLAN OF MERGER   by and between   THE FIRST BANCSHARES,…
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About The First Bancshares, Inc. (OTCMKTS:FBSI)

First Bancshares, Inc. is a holding company of First Home Savings Bank (the Bank). The Bank is primarily engaged in providing a range of banking and mortgage services to individual and corporate customers in southern Missouri. The Bank offers its services in various categories, such as online banking, personal banking and business banking. The Bank’s FirstNet provides access for various banking needs. FirstNet is a free service, including free online BillPay, which is accessible from home or office. Its personal banking services include personal checking accounts, personal savings and money market accounts, personal certificate of deposits and individual retirement accounts, and deposit rates. Its business banking services include business checking accounts, and business savings and money market accounts. The Bank has seven branch facilities in Marshfield, Ava, Kissee Mills, Gainesville, Sparta, Crane and Springfield, which are located in Missouri.