Exhibit 10.11

 

S CORPORATION TERMINATION AND

TAX SHARING AGREEMENT

 

This S Corporation Termination and Tax Sharing Agreement, dated as of September
15, 2016 (the “Agreement”), is made by and among FB Financial Corporation, a
Tennessee corporation (the “Company”), and James W. Ayers (the “Shareholder”).

 

RECITALS:

 

A.The Company has elected to be an S corporation (the “S Election”) under
Section 1362 of the Internal Revenue Code of 1986, as amended (the “Code”).

B.The Company intends to conduct an initial public offering registered under the
Securities Act of 1933, as amended (the “Public Offering”).

C.Upon the consummation of the Public Offering, the Company’s status as an S
corporation will terminate.

D.The Shareholder is currently the only shareholder of the Company, and will
continue to be so until immediately before the consummation of the Public
Offering.

E.In connection with the Public Offering, the Company and the Shareholder desire
to set forth their agreement that the Company shall bear the risk of any
additional tax liability, as well as any related losses, costs and expenses,
resulting from a final determination made by a competent tax authority to the
taxable income the Company reported as an S Corporation.

AGREEMENT:

 

NOW, THEREFORE, for mutual consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Shareholder do hereby covenant and
agree as follows:

 

ARTICLE 1

DEFINITIONS

 

The following terms, as used herein, have the following meanings:

 

“AAA” shall have the meaning assigned to that term by Section 1368(e)(1) of the
Code.

 

“Assumed Tax Rate” means, with respect to any tax period, the maximum combined
federal and state income tax rates applicable for such period, taking into
account the deductibility of state income tax for federal income tax purposes,
applicable to an individual resident in Tennessee.

 

“C Short Year” shall have the meaning set forth in Section 1362(e)(1)(B) of the
Code.

 

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“Code” shall have the meaning set forth in Recital A.

 

“Post­Termination Distribution” shall mean a cash distribution during the
Post­Termination Transition Period as set forth in Section 1371(e) of the Code
to the extent it does not exceed the AAA.

 

“Post-Termination Transition Period” shall have the meaning set forth in Section
1377(b)(1) of the Code and shall begin on the day after the last day of the
Company’s S Short Year.

 

“Public Offering” shall have the meaning set forth in Recital B.

 

“S Corporation” shall have the meaning set forth in Section 1361 of the Code.

 

“S Corporation Taxable Income” shall mean, for periods beginning on or after the
date the Company became an S corporation and ending with the close of the last
day of the S Short Year, the sum of (i) the Company’s items of separately stated
income and gain (within the meaning of Section 1366(a)(1)(A) of the Code)
reduced, to the extent applicable, by the Company’s separately stated items of
deduction and loss (within the meaning of Section 1366(a)(1)(A) of the Code) and
(ii) the Company’s nonseparately computed net income (within the meaning of
Section 1366(a)(l)(B) of the Code).

 

“S Corporation Tax Year” means any taxable period during which the Company had
an S Election in effect, including the S Short Year.

 

“S Election” shall have the meaning set forth in Recital A.

 

“S Short Year” shall have the meaning set forth in Section 1362(e)(1)(A) of the
Code.

 

“S Termination Year” shall have the meaning set forth in Section 1362(e)(4) of
the Code.  

 

“Tax Proceeding” shall have the meaning set forth in Section 2.02.

 

“Termination Date” shall mean the date on which the Company’s status as an S
corporation is terminated by reason of the consummation of the Public Offering.

 

“Treasury Regulations” means the regulations promulgated by the United States
Treasury Department under the Code.

 

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ARTICLE 2

S CORPORATION TERMINATION AND TAX SHARING

 

2.01 Termination of S Corporation Status.  The Company’s status as an S
corporation shall terminate pursuant to Section 1362(d)(2) of the Code on the
Termination Date.

 

2.02 Payments Related to Future Adjustments. In the event that any final
determination of an adjustment (by reason of an amended return, claim for
refund, audit, judicial decision or otherwise, which determination occurs after
the Termination Date (each, a “Tax Proceeding”)) results in an increase in the
taxable income of the Company for any year during which the Company qualified as
an S Corporation, including the S Short Year, the Company shall distribute to
the Shareholder within 30 days of such final determination, cash in an amount
equal to (i) the product of (A) the amount of increase in taxable income
resulting from the adjustment and (B) the Assumed Tax Rate plus (ii) any
interest and penalties imposed thereon.

 

2.03 Liability for Taxes Incurred During the S Short Year and for Tax Periods
Ending Prior to the Termination Date.  The Shareholder covenants and agrees
that: (i) he has duly included (to the best of his knowledge), or will duly
include, in his federal, state, and local income tax returns his respective
allocable shares of all items of income, gain, loss, deduction, or credit
attributable to the S Short Year of the Company, (ii) such returns shall, to the
extent required by applicable law, include his allocable share of S Corporation
Taxable Income of the Company from all sources through and including the close
of business on the last day of the S Short Year of the Company, and (iii) he
shall, to the extent required by applicable law, pay any and all taxes he is
required to pay, as a result of being a shareholder of the Company, for all
taxable periods (or that portion of any period) during which the Company was an
S Corporation.

 

2.04 Shareholder Indemnification for Tax Liabilities. The Shareholder hereby
indemnifies and holds the Company harmless from, against and in respect of any
unpaid income tax liabilities of the Company (including interest and penalties
imposed thereon) (i) which are attributable to the S Short Year and the primary
liability of the Shareholder, or (ii) which are incurred by the Company as a
result of a final determination of an adjustment (by reason of a Tax Proceeding)
to the taxable income of the Shareholder for any period, including the S Short
Year or thereafter, and which (in the case of this clause (ii)) are attributable
to a decrease for any period in the Shareholder’s taxable income and a
corresponding increase for any period in the taxable income of the Company.

 

2.05 Company Indemnification for Tax Liabilities. The Company hereby indemnifies
and agrees to hold the Shareholder harmless from, against and in respect of
income tax liabilities (including interest and penalties imposed thereon), if
any, incurred by the Shareholder as a result of a final determination of an
adjustment (by reason of a Tax Proceeding) to the taxable income of the Company
for any period ending after the Termination Date (including, without limitation,
the C Short Year) which results in an increase for any period in the taxable
income of the Shareholder. The Company shall distribute cash in an amount equal
to (i) the product of (A) the amount of such increase in the taxable income
resulting from such final determination and (B) the Assumed Tax Rate, plus (ii)
any interest and penalties imposed thereon.

 

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2.06 Payments.  The Shareholder or the Company, as the case may be, shall make
any payment required under Sections 2.04 or 2.05 of this Agreement within 30
days after receipt of notice from the other party that a final determination of
an adjustment (by reason of a Tax Proceeding) has occurred and a payment is due
by such party to the appropriate taxing authority.

 

2.07 Termination Payments to Shareholder.  Immediately prior to or as soon as
possible after the Termination Date, the Company shall determine the amount of
the AAA of the Company, and as soon as reasonably possible after the Termination
Date shall distribute to the Shareholder an amount equal to such amount (the
“Distribution Amount”).  For purposes of this Section 2.07, the AAA shall be
determined by the Company in accordance with the Company’s books and records and
consistent with Section 1368 of the Code and the Treasury Regulations
thereunder.

 

ARTICLE 3

ALLOCATION OF INCOME

 

3.01 Short Taxable Years.  The parties acknowledge that the taxable year in
which the S corporation status of the Company is terminated will be an “S
Termination Year” for tax purposes, as defined in Section 1362(e)(4) of the
Code.  Pursuant to Section 1361(e)(1) of the Code, the S Termination Year of the
Company shall be divided into two short taxable years: an “S Short Year” and a
“C Short Year.” As defined in Section 1362(e)(1)(A) of the Code, the S Short
Year shall be that portion of the Company’s S Termination Year ending on the day
immediately preceding the Termination Date.  Pursuant to Section 1362(e)(1)(B)
of the Code, that portion of the S Termination Year beginning on the Termination
Date and ending on the last day of the taxable year shall be the C Short Year of
the Company.

 

3.02 Pro Rata Allocation.  The Company and the Shareholder understand that for
tax purposes (including for purposes of determining the Company’s S Corporation
Taxable Income for its S Short Year) the Company will be required to allocate
its items of income, gain, loss, deduction and credit for its calendar year
between the S Short Year and the C Short Year on a “pro rata” basis in
accordance with Section 1362(e)(2) of the Code.

 

ARTICLE 4

TAX MATTERS

 

4.01.Refunds. If the Company receives a refund of any income tax (including
penalties and interest) for any period prior to the Termination Date, or as to
which it has previously been indemnified by the Shareholder, the Company shall
pay an amount equal to such refund, within 30 days after receipt thereof, to the
Shareholder on the last day of any applicable period to which the refund
relates. If the Shareholder receives a refund of any income tax (including
penalties and interest) as to which it has previously been indemnified by the
Company, he shall, within 30 days after receipt thereon, remit an amount equal
to such refund to the Company (for the avoidance of doubt, such refund shall be
determined assuming the Shareholder’s only items of income, loss or deduction
arise from the Company during the S Short Year).

 

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4.02.Notice and Tax Proceedings.

 

(a)Any time that the Shareholder believes he may be entitled to a payment under
this Agreement as a result of a Tax Proceeding he shall use reasonable efforts
to promptly notify the Company of such Proceeding.

(b)The Company will have the option to represent itself in any Tax Proceeding,
at its own expense and using advisors of the Company’s choice.

(c)The Shareholder shall cooperate fully with the Company in any Tax Proceeding
and shall have the right, but not the obligation, to participate in such
Proceeding at his own expense.

(d)Breach by the Shareholder of any of the provisions of this Section 4.01 will
terminate the Company’s obligation to make payments to the Shareholder under
Article 2 to the extent any such breach materially prejudices the result of any
Tax Proceeding.

4.03.Inconsistent Reporting. If the Shareholder hereafter reports an item on the
Shareholder’s income tax return in a manner materially inconsistent with the tax
treatment reflected in the Schedule K-1 or other tax information provided to the
Shareholder by the Company for a taxable period during which the Company had an
S Election in effect, the Shareholder shall notify the Company of such treatment
before filing the Shareholder’s income tax return. If the Shareholder fails to
notify the Company of such inconsistent reporting, the Shareholder shall be
liable to the Company for any losses, costs or expenses (including reasonable
attorneys’ fees) arising from such inconsistent reporting, including an audit.

 

ARTICLE 5

MISCELLANEOUS

 

5.01 Post-Termination Distributions.  To the extent practicable and to the
extent consistent with applicable law, payments or other distributions made to
the Shareholder pursuant to Article 2 will be treated as Post-Termination
Distributions for U.S. federal income tax purposes and any correspondingly
applicable state and/or local tax purposes.  To the extent that the Company’s
tax return preparers determine that such payments or distributions cannot be
properly treated as Post-Termination Distributions, then the amount of any
distribution made to the Shareholder pursuant to Article 2 shall be increased by
the amount of the Shareholder’s additional tax liability, if any, resulting from
such payments or distributions, as reasonably determined by the Company’s tax
return preparers, plus an amount equal to any additional tax liability resulting
from the payment pursuant to this Section 5.01, assuming that the Shareholder
pays tax at the Assumed Tax Rate.

 

5.02.Intent of Parties. It is the parties’ intent that the liability for income
taxes arising from the operations of the Company will be borne by the
Shareholder for all periods through and including the S Short Year and by the
Company for periods beginning with the C Short Year, and this Agreement shall be
construed so as most equitably to achieve such intent.

 

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5.03 Confidentiality.  Each of the parties agrees that any information furnished
pursuant to this Agreement is confidential and, except as and to the extent
required by law or otherwise during the course of an audit or contest or other
administrative or legal proceeding, shall not be disclosed to any person or
entity.

 

5.04 Successors and Access to Information.  This Agreement shall be binding upon
and inure to the benefit of any successor, heirs or personal representatives to
any of the parties, by merger, acquisition of assets or stock in the Company or
otherwise, to the same extent as if the successor, heir or personal
representative had been an original party to this Agreement or the Shareholder
for the taxable period in question, and in such event, all references herein to
a party shall refer instead to the successor, heir or personal representative of
such party; provided, however, that for purposes of calculating the tax
liability to which any payments under this Agreement would relate, the original
Shareholder’s tax liability shall be taken into account, but any payments in
connection therewith shall be made to the successor, heir or personal
representative of the original Shareholder.

 

5.05 Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee excluding (to the greatest
extent permissible by law) any rule of law that would cause the application of
the laws of any jurisdiction other than the State of Tennessee.  

 

5.06 Headings.  The headings in this Agreement are for convenience only and
shall not be deemed for any purpose to constitute a part or to affect the
interpretation of this Agreement.

 

5.07 Counterparts.  This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one counterpart.

 

5.08 Electronic Transmission.  Any facsimile or electronically transmitted
copies hereof or signature hereon shall, for all purposes, be deemed originals.

 

5.09 Notices.  Any notice or communication required or permitted to be given
under this Agreement shall be in writing (including telecopy communication) and
mailed, telecopied or delivered to the parties at the addresses specified in
Schedule A or at such other address as one party may specify by notice to the
other party.  All such notices and communications shall be effective when
received.  Any payment required to be made under this Agreement shall be mailed
or delivered to the parties at the addresses specified in Schedule A or at such
other address or account as one party may specify by notice to the other party.

 

5.10 Severability.  If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the maximum extent
practicable.  In any event, all other provisions of this Agreement shall be
deemed valid, binding, and enforceable to their full extent.

 

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5.11 Survival.  This Agreement shall remain in force and be binding so long as
the applicable period of assessments (including extensions) remains unexpired
for any taxes contemplated by this Agreement.

 

5.12 Successor Provisions.  Any reference herein to any provisions of the Code
or Treasury Regulations shall be deemed to include any amendments or successor
provisions thereto as appropriate.

 

5.13 Integration; Amendments.  Except as explicitly stated herein, this
Agreement embodies the entire understanding between the parties relating to its
subject matter and supersedes and terminates all prior agreements and
understandings among the parties with respect to such matters.  No promises,
covenants or representations of any kind, other than those expressly stated
herein, have been made to induce any party to enter into this Agreement.  This
Agreement shall not be modified or terminated except by a writing duly signed by
each of the parties hereto, and no waiver of any provisions of this Agreement
shall be effective unless in a writing duly signed by the party sought to be
bound.

 

5.14 Waiver of Jury Trial.  EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY DISPUTE ARISING OUT OF THIS AGREEMENT.  EACH PARTY (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.14.

 

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the parties have executed this S Corporation Termination and
Indemnification Agreement on the date first set forth above.

 

COMPANY:

 

FB FINANCIAL CORPORATION,

a Tennessee corporation

 

By:

/s/ Christopher T. Holmes

Name:

Christopher T. Holmes

Title:

President and Chief Executive Officer

 

 

SHAREHOLDER:

 

 

/s/ James W. Ayers

James W. Ayers

 

 

 

 

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SCHEDULE A

 

Notices

 

To the Company:

 

FB Financial Corporation

211 Commerce Street, Suite 300

Nashville, Tennessee 37201

Attn: General Counsel

 

With a copy to:

 

Alston & Bird LLP

One Atlantic Center

1201 West Peachtree Street

Atlanta, Georgia 30309

Attn: Kyle G. Healy

 

To the Shareholder:

 

Ayers Asset Management

211 Commerce Street, Suite 300

Nashville, Tennessee 37201

Attn: James W. Ayers, President

 

With a copy to:

 

Ayers Asset Management

211 Commerce Street, Suite 300

Nashville, Tennessee 37201

Attn: David Bourgeois, Chief Financial Officer