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EXHIBIT 1.1
FRANKLIN FINANCIAL CORPORATION FRANKLIN CAPITAL TRUST I
SELLING AGENCY AGREEMENT
June ___, 2000
Morgan Keegan & Company, Inc.
Morgan Keegan Tower
50 Front Street
Memphis, TN 38103
Dear Sirs:
The undersigned, Franklin Financial Corporation, a Tennessee
corporation and a bank holding company registered under the federal Bank Holding
Company Act of 1956, as amended, (the "Company"), and Franklin Capital Trust I,
a Delaware business trust (the "Trust"), hereby confirm their agreement with
you, Morgan Keegan & Company, Inc. (the "Placement Agent"), as follows:
1. General.
This agreement sets forth the understanding and agreement among the
Company, the Trust and the Placement Agent (this "Agreement") whereby, subject
to the terms and conditions contained herein, the Placement Agent will offer to
sell on behalf of the Trust, on a best efforts basis, and the Trust will sell
pursuant to subscriptions obtained by the Placement Agent, a minimum of
$10,000,000 and a maximum of $16,000,000 of Floating Rate Preferred Securities
of the Trust at a price of $1,000 per security (the "Preferred Securities").
This offering is referred to herein as the "Offering."
2. Appointment of Placement Agent; Timing; Compensation.
(a) The Company and the Trust hereby appoint the Placement Agent
as their sole and exclusive agent for the purpose of selling, in accordance with
the terms and conditions hereof, the Preferred Securities. The Placement Agent
hereby accepts such agency and agrees to use its best efforts to sell the
Preferred Securities on said terms and conditions. In the event the Company or
any of its executive officers is contacted directly or indirectly during or
prior to the Offering Period (as hereinafter defined) by prospective purchasers
of the Preferred Securities, the Company will promptly forward the names of such
prospective purchasers to the Placement Agent.
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(b) The Placement Agent's appointment will commence on the date of
the execution of this Agreement, and shall continue for a period of 30 days from
the effective date (the "Effective Date") of the registration statement (File
No. 333-_______) filed by the Company and the Trust on Form S-2 (the
"Registration Statement"), and may be extended for a period of up to 30
additional days by agreement of the Company and the Placement Agent (the
"Offering Period"). The Placement Agent will offer the Preferred Securities in
such jurisdictions as it may reasonably deem necessary to accomplish the sale of
the Preferred Securities, provided such offers comply with each jurisdiction's
securities laws, regulations and "Blue Sky" requirements. Offers will commence
in such jurisdictions and on such dates as applicable securities laws
requirements have been complied with.
(c) The Offering will end 30 days from the Effective Date or
sooner if all the Preferred Securities have been subscribed, or, if the Company
and the Placement Agreement agree to extend the offering for an additional
period or periods of not more than 30 days in the aggregate, such later date to
which the offering is so extended, or upon mutual agreement of the Placement
Agent and the Company (the "Termination Date").
(d) The Offering will terminate and all amounts paid by
subscribers to purchase the Preferred Securities will be promptly returned to
them with interest payable at the federal funds rate as provided in the
Prospectus and the Escrow Agreement (as hereinafter defined) (i) if
subscriptions for at least 10,000 Preferred Securities have not been received by
the Termination Date or (ii) at any time by agreement of the Company and the
Placement Agent.
(e) The Placement Agent acknowledges that it is a party to an
escrow agreement of even date herewith between the Placement Agent, the Trust,
the Company, and First Tennessee Bank National Association, as Escrow Agent, a
copy of which is attached hereto as Exhibit A. The Placement Agent agrees to
promptly upon receipt deliver all cash and checks received by the Placement
Agent for subscriptions, along with each originally executed Subscription
Agreement, to the Escrow Agent. At the time the subscriber tenders such cash or
checks, the subscriber will submit one executed copy of a subscription agreement
(the "Subscription Agreement"). The Placement Agent will promptly deliver to the
Company and the Trust one photocopy of each Subscription Agreement.
(f) As compensation for the services rendered by the Placement
Agent, the Company, on behalf of the Trust, will pay to the Placement Agent a
placement fee equal to 3% of the gross proceeds of the Offering (assuming the
minimum offering amount described in paragraph 1 hereof is reached) (the
"Placement Fee"), but in any event, the Placement Fee shall not exceed any
regulatory amount allowed for this type of transaction.
(g) Subject to the prior termination of the Offering as provided
herein, there shall be a closing (the "Closing") at the offices of Baker,
Donelson, Bearman & Caldwell, P.C. on the fifth business day immediately
following the termination of the Offering Period (or at such other place or time
not later than ten business days thereafter as the Placement Agent and the
Company shall
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determine) (the "Closing Date"). Such Closing shall include the following: (i)
satisfaction of the conditions set forth in Section 6; (ii) payment for the
Preferred Securities to the Trust by release of funds from the account held by
the Escrow Agent and delivery to the Trust of properly completed and executed
Subscription Agreements for each purchaser; and (iii) payment of the Placement
Fee by the Company to the Placement Agent.
(h) The Placement Agent will not have any rights or obligations in
connection with the Offering contemplated by this Agreement except as expressly
provided in this Agreement. In no event shall the Placement Agent be obligated
to purchase the Preferred Securities for its own account.
(i) After the Closing, the Placement Agent shall have the right to
place advertisements in financial and other newspapers and journals at its own
expense describing its services to the Company hereunder, provided that the
Placement Agent will submit a copy of any such advertisements to the Company for
its prior approval, which approval shall not unreasonably be withheld.
3. Representations, Warranties and Covenants of the Company and
the Trust.
The Company and the Trust, jointly and severally, represent and warrant
to, and agree with, the Placement Agent that:
(a) The Company and the Trust have prepared and filed with the
Securities and Exchange Commission (the "Commission") the Registration Statement
and one or more amendments to such Registration Statement, including a
preliminary prospectus, subject to completion. After the execution of this
Agreement, the Company will file with the Commissioner either (A) if such
Registration Statement, as it may have been amended, has become effective under
the Act and information has been omitted therefrom in accordance with Rule 430A
under the Act, a prospectus in the form most recently included in an amendment
to such Registration Statement, with such changes or additions as are required
by Rule 430A or permitted by Rule 424(b) under the Act and as have been provided
to and approved by the Placement Agent, or (B) if such Registration Statement,
as amended, has not become effective under the Act, an amendment to such
Registration Statement, including a form of prospectus as has been provided to
and approved by the Placement Agent. The term "Prospectus" means the prospectus
first filed with the Commission pursuant to Rule 424(b) under the Act, or, if no
prospectus is required to be so filed, such term means the prospectus included
in the Registration Statement. The Company and the Trust will use their
reasonable best efforts to cause the Registration Statement to become effective
as promptly as possible following agreement between the Company and the
Placement Agent that such effectiveness is desired and will notify the Placement
Agent promptly (i) when the Registration Statement and any amendment thereto
shall have become effective or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, (iii) of the issuance by the
Commission of any stop order suspending
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the effectiveness of the Registration Statement, (iv) of the institution of any
proceedings for that purpose, (v) of the institution or threatening by the
Commission of any investigation or other proceeding that might result in the
suspension of the use of the Prospectus, (vi) of the suspension of the
qualification of the Preferred Securities for offering or sale in any
jurisdiction, (vii) of the institution or threatening of any proceedings for any
such purpose or (viii) for the purpose of preventing the use of or noticing a
deficiency in the Prospectus, any amended Prospectus or any supplement thereto.
The Company and the Trust will not, without the Placement Agent's prior consent
(which shall not be unreasonably withheld), file any other amendment thereto
prior to the time such Registration Statement shall become effective or make any
change in such form of final Prospectus prior to the time it is first filed with
the Commission pursuant to Rule 424(b) of the Act.
(b) The Company will furnish such number of printed copies of the
Registration Statement (two of which will be signed and will include all
exhibits), and the Prospectus, with all amendments, supplements and exhibits
thereto, as the Placement Agent may reasonably request and, similarly, will
furnish to the Placement Agent and others designated by the Placement Agent with
as many copies of any additional sales literature or other materials approved by
the Company for use in connection with the offering of the Preferred Securities
as the Placement Agent may reasonably request.
(c) The Company will use its best efforts to arrange for the
qualification of the Preferred Securities under the laws of such jurisdictions
as the Placement Agent shall designate and will continue such qualifications in
effect so long as required for the offering of the Preferred Securities as
contemplated herein, provided that the Company shall not be obligated to qualify
as a foreign corporation or as a dealer in securities in any state in which it
is not now so qualified.
(d) When the Registration Statement becomes effective and the
Prospectus is issued, each will fully comply, as of their respective effective
or issue dates, and will continue to comply at all times up to and including the
Closing Date, with the applicable provisions of the Securities Act and the rules
and regulations under the Securities Act. The Registration Statement and the
Prospectus, as of their respective effective or issue dates, did not contain,
and will not contain up to and including the Closing Date, any untrue statement
of a material fact and do not, and will not, omit to state any material fact
required to be stated therein (in the case of the Prospectus, in light of the
circumstances under which they were made) or necessary in order to make the
statements therein not misleading. The foregoing does not apply to statements or
omissions in the Registration Statement or the Prospectus based upon written
information furnished to the Company by the Placement Agent specifically for use
therein.
(e) The Company is, and at all times during the Offering Period
will be, a bank holding company, duly organized, validly existing and in good
standing under the laws of the state of Tennessee, and qualified in any other
jurisdiction in which the business of the Company requires qualification (except
when the failure to be so qualified will not reasonably result in a material
adverse effect on the Company), with full corporate power and authority to
conduct its business as described in the Registration Statement and to own or
lease all the assets owned or leased by it. The
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Trust, at all times during the Offering Period, will be a business trust, duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power to conduct all the activities conducted by
it. Complete and correct copies of the Company's Charter and Bylaws in effect as
of the date hereof have been or will be delivered to the Placement Agent. A
complete and correct copy of the Trust's certificate of trust in effect as of
the date hereof has been or will be delivered to the Placement Agent.
(f) The Preferred Securities have been duly authorized, and when
issued and delivered against payment therefor as contemplated by this Agreement,
will have been validly issued and will be fully paid and nonassessable, and
conform to the description thereof contained in the Prospectus.
(g) This Agreement and the Escrow Agreement have each been duly
authorized, executed and delivered by the Trust and the Company and each of this
Agreement and the Escrow Agreement constitutes a legal, valid and binding
obligation of each of the Company and the Trust, enforceable in accordance with
its terms , subject as to enforcement, to applicable law limiting enforcement of
indemnification provisions herein, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or affecting the
enforcement of creditors rights generally and to general equitable principles.
(h) The execution and delivery of this Agreement, and the Escrow
Agreement and the performance by the Company and the Trust hereunder and
thereunder will not conflict with, result in a breach or violation of or
constitute a default under any agreement or instrument to which the Company or
the Trust is a party or the corporate charter or by-laws of the Company or any
law, order, rule, regulation, decree or injunction of any jurisdiction, court or
governmental agency or body having jurisdiction over the Company, and no
consent, approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the performance by the Company or
the Trust of this Agreement or the Escrow Agreement or the consummation by the
company or the Trust of the transactions contemplated hereby or thereby, except
such as may be required under the Securities Act, or state securities laws.
(i) The Company has not given any information or made any
representation in connection with the offering of the Preferred Securities,
written or oral, other than as contained in the Prospectus and the Registration
Statement.
(j) There is no person or entity, other than the Placement Agent,
that is entitled to a finder's fee or any type of brokerage commission in
connection with the transactions contemplated by this Agreement as a result of
any agreement or understanding with the Company or the Trust.
(k) If prior to the date of Closing or at any date thereafter when
a Prospectus relating to the Preferred Securities is required to be delivered
under the Act, any event, known to the Company, shall have occurred as a result
of which the Prospectus in its then current form, including any supplements
thereto, would include an untrue statement of a material fact or would omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances
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under which they were made, not misleading, or if for any other reason it shall
be necessary to amend or supplement the Registration Statement or Prospectus,
the Company will promptly so advise the Placement Agent and will promptly amend
or supplement the Registration Statement and Prospectus and, upon the Placement
Agent's request, will furnish as many copies as the Placement Agent may
reasonably request of an amended or supplemented Registration Statement and
Prospectus correcting such statement or omission or responding to such other
reason for amendment or supplementation.
(l) The Company will apply the net proceeds of the Offering in the
manner set forth in the Prospectus, and any amendments and supplements thereto.
(m) All opinions and advice provided to the Company in connection
with this engagement are intended solely for the benefit and use of the Company
in connection with the matters described in this Agreement, and accordingly such
advice shall not be relied upon by any person or entity other than the Company.
The Company will not make any other use of such opinions or advice. In addition,
none of (i) the name of the Placement Agent, (ii) any advice rendered by the
Placement Agent to the Company, or (iii) any communication from the Placement
Agent pursuant to this Agreement will be quoted or referred to in any report,
document, release or other communication prepared, issued or transmitted by the
Company, or any person controlled by the Company, without the Placement Agent's
prior consent, which consent will not be unreasonably withheld.
4. Representations, Warranties and Covenants of the Placement
Agent.
The Placement Agent represents and warrants to and agrees with the
Company that:
(a) The Placement Agent is, and at all times during the Offering
Period will be, a corporation duly organized, validly existing and in good
standing under the laws of the state of its organization, with full corporate
power and authority to conduct all of its obligations under this Agreement. The
Placement Agent is duly qualified to transact business, to the extent required,
in each jurisdiction in which any of the Preferred Securities may be offered or
sold.
(b) This Agreement and the Escrow Agreement have been duly
authorized, executed and delivered by the Placement Agent, and each agreement
constitutes a valid and binding agreement of the Placement Agent. The
performance of this Agreement and the Escrow Agreement and the consummation of
the transactions contemplated hereby and thereby will not result in a material
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement, bond
indenture, note or other evidence of indebtedness, lease, contract, or other
agreement or instrument to which the Placement Agent is a party or by which the
Placement Agent or any of its properties is bound, or under any statute or under
any order, rule or regulation of any court or other governmental agency or body
applicable to the Placement Agent or its business or properties. No consent,
approval, authorization or order of any court or governmental agency or body is
required for the consummation by the Placement Agent of the
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transactions on its part contemplated in this Agreement or the Escrow Agreement,
except as such may be required under state securities laws.
(c) No statement, representation, warranty or covenant made by the
Placement Agent in this Agreement or made in any certificate or document
required by this Agreement to be delivered to the Company was or will be,
inaccurate, untrue or incorrect in any material respect.
(d) There is no other person or entity that is entitled to a
finder's fee or any type of brokerage commission in connection with the
transactions contemplated by this Agreement as a result of any agreement or
understanding with the Placement Agent.
(e) The Placement Agent is, and will remain at all times during
the Offering Period, a member in good standing of the National Association of
Securities Dealers, registered as a broker-dealer under the Securities Exchange
Act of 1934, as amended, and to the extent required, under the laws of each
jurisdiction in which the Preferred Securities may be offered or sold.
(f) All information furnished to the Company by the Placement
Agent in writing expressly for use in the Registration Statement, the Prospectus
or in any amendment or supplement thereto will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(g) The Placement Agent and its agents and representatives will
not make any material representations or other statements of fact with respect
to the Company or the Preferred Securities except as set forth in the Prospectus
or any amendments or supplements thereto.
(h) The Placement Agent will deliver a copy of the preliminary
Prospectus (and all amendments, supplements and exhibits thereto) to each
prospective investor from whom it solicits a subscription and will timely
deliver a copy of the final Prospectus to each investor who purchases a
Preferred Security.
(i) The Placement Agent will, on request, inform the Company of
the status of the Offering and amount of Preferred Securities subscribed.
(j) The Placement Agent will promptly inform the Company of any
facts that come to its attention that would cause a reasonable person to believe
that the Registration Statement, Prospectus or form of Subscription Agreement
contain any material misstatement or omission.
5. Expenses.
Whether or not the transactions contemplated hereunder are consummated,
the Company will pay all costs and expenses incident to the performance of its
obligations hereunder, including, without limiting the generality of the
foregoing, all costs and expenses incurred in connection with:
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(i) the issuance, sale and delivery of the Preferred Securities (including all
transfer and other taxes thereon); (ii) the preparation, filing, printing, and
delivery of the Registration Statement (including all exhibits thereto and
documents incorporated therein by reference), the Prospectus and any amendments
thereof and supplements thereto, this Agreement and related selling and other
documents in connection with the offering (iii) the filing fees and expenses
incurred in connection with the qualification of the Preferred Securities under
state securities or Blue Sky laws and filing fees in connection with the review
of the terms of the public offering of the Preferred Securities by the National
Association of Securities Dealers, Inc. ("NASD"); (iv) the fees, disbursements
and expenses of the accountants and counsel for the Company; (v) the fees of the
Company's transfer agent and registrar; (vi) all fees and expenses regarding the
Escrow Agreement and Escrow Agent fees; and (vii) all fees and expenses
regarding formation of the Trust. It is understood that except as provided in
this Section 5, the Placement Agent will pay all of its costs and expenses,
including travel, telephone, advertising, and fees, disbursements and expenses
of its counsel, relating to the offering of the Preferred Securities.
6. Conditions of the Placement Agent's Obligations.
The obligations of the Placement Agent hereunder shall be subject to
the continued accuracy in all material respects throughout the Offering Period
of the representations, warranties, and agreements of the Company and the Trust,
to the performance in all material respects by the Company and the Trust of
their obligations hereunder and as contained in the Registration Statement and
the Prospectus and at the date of Closing to the following terms and conditions:
(a) The Registration Statement shall have become effective prior
to the Closing and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted, or, to the knowledge of the Company, shall
be contemplated, by the Commission.
(b) The Placement Agent shall have received an opinion of George
J. Regg, Jr., Esq., Senior Vice President and General Counsel to the Company,
dated the Closing Date, to the effect that:
(i) The Company is a corporation existing and in good
standing under the laws of the State of Tennessee,
and qualified in any other jurisdiction in which the
business of the Company requires qualification. The
Company has the corporate power and authority to own
its properties and to conduct its business as
described in the Registration Statement and the
Prospectus;
(ii) To the knowledge of such counsel after due inquiry,
no consent, approval, authorization or order of any
court or government agency or body is required with
respect to the Company that has not been received for
the consummation of the transactions contemplated by
this Agreement, except
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such as may be required under state securities laws
in connection with the purchase and distribution of
the Preferred Securities;
(iii) This Agreement and the Escrow Agreement, and the
performance of the obligations of the Company
hereunder and thereunder have been duly authorized by
all necessary action, and this Agreement and the
Escrow Agreement have been duly executed and
delivered by and on behalf of the Company and the
Trust; and
(iv) The execution, delivery, and performance by the
Company of this Agreement does not (i) conflict with
the charter or bylaws of the Company, (ii) constitute
a violation of or a default under any applicable
agreement or instrument to which the Company is
subject and which has been specifically identified to
such counsel by the Company and identified in an
exhibit to such opinion, (iii) contravene any
applicable law, rule or regulation or (vi) contravene
any applicable order or decree of any executive,
legislative, judicial, administrative or regulatory
body having jurisdiction over the Company.
Such counsel shall also state that he has participated in the
preparation of the Registration Statement and Prospectus and no facts have come
to the attention of such counsel that cause such counsel to believe that the
Registration Statement or Prospectus as of the Effective Date or its issue date,
respectively, and as of the date of Closing, contains or contained any untrue
statement of a material fact or omits or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading,(provided that such counsel need
express no belief regarding the financial statements, notes and related
schedules and other financial or statistical data contained therein).
(c) The Placement Agent shall have received an opinion of Smith,
Gambrell & Russell, LLP, outside counsel for the Company, dated the Closing
Date, to the effect that:
(i) The terms of the escrow established pursuant to the
Escrow Agreement comply in all material respects with
the requirements of Rule 10b-9 under the Securities
Exchange Act of 1934, as amended; and
(ii) such counsel does not know of any legal or
governmental proceedings, pending or threatened,
required under the Securities Act to be described in
the Registration Statement or the Prospectus, which
are not described as required;
(iii) the Registration Statement has become effective under
the Securities Act, and, to the best of the knowledge
of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been
issued and no
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proceedings for such purposes have been instituted or
are pending or contemplated under the Securities Act.
Such counsel shall also state that it has participated in the
preparation of the Registration Statement and Prospectus and no facts have come
to the attention of such counsel that cause such counsel to believe that the
Registration Statement or Prospectus as of the Effective Date or its issue date,
respectively, and as of the date of Closing, contains or contained any untrue
statement of a material fact or omits or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading,(provided that such counsel need
express no belief regarding the financial statements, notes and related
schedules and other financial or statistical data contained therein).
(d) The Placement Agent shall have received an opinion of
Richards, Layton & Finger, P.A., counsel for the Trust, dated the Closing Date,
to the effect that:
(i) The Trust has been duly created and is validly
existing, in good standing as a business trust under
the Delaware Business Trust Act. Under the Delaware
Business Trust Act and the Trust Agreement, the Trust
has the power and authority to conduct its business
as described in the Registration Statement and the
Prospectus; and
(ii) The Preferred Securities have been duly authorized by
the Trust Agreement and, when delivered and paid for
pursuant to the Trust Agreement, this Agreement and
the Subscription Agreements therefor, will be validly
issued and, subject to certain qualifications
described in such opinion, fully paid and
nonassessable undivided beneficial interests in the
assets of the Trust.
(e) The Placement Agent shall have received from Baker, Donelson,
Bearman & Caldwell, P.C., counsel for the Placement Agent, such opinion or
opinions, dated the Closing Date, with respect to matters relating to the
offering of the Preferred Securities as the Placement Agent may reasonably
request, and the Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(f) The Placement Agent shall have received a certificate of the
chief executive officer and a principal financial or accounting officer of each
of the Company and the Trust dated the Closing Date, to the effect that:
(i) The representations and warranties herein of the
Company and the Trust are true and correct as of the
Closing Date with the same force and effect as if
made on that date;
(ii) The Company and the Trust have performed all of their
obligations hereunder to be performed at or prior to
the Closing Date; and
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(iii) Since the effective date of the Registration
Statement, there has not occurred any event required
to be set forth in an amended or supplemented
Prospectus which has not been so set forth, and any
such amendment or supplement does not include any
untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary to make the statements therein not
misleading.
(g) At the Effective Date and at the Closing Date, the Placement
Agent shall have received a letter of Deloitte & Touche LLP, certified public
accountants, dated the Effective Date or the Closing Date, confirming that they
are independent certified public accountants with respect to the Company within
the meaning of the Securities Act and stating in effect that:
(i) In their opinion the balance sheet included in the
Prospectus complies as to form in all material
respects with the applicable accounting requirements
of the Securities Act;
(ii) On the basis of a reading of the latest available
interim financial statements of the Company,
inquiries of officials of the Company responsible for
financial and accounting matters and other specified
procedures, nothing came to their attention that
caused them to believe that at the date of the latest
available balance sheet read by such accountants, or
at a subsequent specified date not more than five
days prior to the Closing Date, there was any decline
in the capital stock or stockholders equity of the
Company as compared with amounts shown on the balance
sheet included in the Prospectus, except for such
changes as are contemplated by the Prospectus and as
are described in such letter; and
(iii) They have confirmed such procedures with respect to
certain information contained in the Prospectus as
were previously agreed upon by the Placement Agent
and the accountants.
(h) The Company shall have furnished to the Placement Agent such
additional certificates, if any, with respect to the representations and
warranties of the Company and the Trust contained herein as the Placement Agent
shall reasonably have requested.
(i) Since the respective dates as of which information is given in
the Prospectus, there shall not have been any change, or any development
involving a prospective change, in the condition (financial or otherwise) of the
Company or in any pending action, suit, proceeding or investigation involving
the Company whether or not arising from transactions in the ordinary course of
business, that, in the Placement Agent's reasonable judgement, is material and
renders it impractical or inadvisable to proceed with the completion of the sale
of and payment for the Preferred Securities on the Closing Date.
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(j) No notice of disapproval shall have been issued or proceedings
for that purpose shall have been instituted by the Commission, the NASD, or any
state securities authority with respect to the distribution arrangements
relating to the offering of the Preferred Securities.
If any condition to the obligations of the Placement Agent
hereunder to be fulfilled prior to or at the Closing Date or during the Offering
Period is not so fulfilled, the Placement Agent may terminate this Agreement or,
if it so elects, may waive any such condition that has not been fulfilled or
extend the time for its fulfillment.
7. Indemnification.
(a) If, in connection with the services or matters that are the
subject of this Agreement, the Placement Agent or any controlling person,
affiliate, director, officer, employee or agent of the Placement Agent (the
Placement Agent and each such other person referred to as an "Indemnified
Person") becomes involved in any capacity in any lawsuit, claim or other
proceeding for which indemnity may be sought pursuant to this Section 7, the
Company shall immediately reimburse such Indemnified Person for any and all
reasonable legal or other expenses reasonably incurred in connection with
investigating, preparing to defend or defending such lawsuit, claim or other
proceeding. The Company also agrees to indemnify each Indemnified Person from,
and hold it harmless against, any and all losses, claims, damages, liabilities
or expenses to which such Indemnified Person may become subject (i) arising out
of or based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, Prospectus, or the Subscription
Agreement, except any information furnished to the Company by the Placement
Agent expressly for use in the Registration Statement or Prospectus, or arising
out of or based upon the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or (ii) arising in any
manner out of or in connection with the services or matters which are the
subject of this Agreement, including, without limitation, the offer and sale of
the Preferred Securities; provided, however, that the Company shall not be
liable under this Section 7 in respect of any reimbursement, loss, claim,
damage, liability or expense to the extent that: (i) it is finally judicially
determined by a court of competent jurisdiction that such loss, claim, damage,
liability or expense resulted directly from the gross negligence or willful
misconduct of the Placement Agent in the performance of its services hereunder,
or (ii) any such loss, claim, damage, liability or expense arises out of or is
based upon any misrepresentation or breach of this Agreement by the Placement
Agent, (iii) any amounts paid in settlement of any lawsuit, claim or other
proceeding without the prior written consent of the Company or (iv) any such
loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, Prospectus or Subscription Agreement in
reliance upon and in conformity with written information furnished to the
Company by the Placement Agent expressly for use therein; provided, further,
that with respect to any preliminary Prospectus, the foregoing indemnity
agreement shall not inure to the benefit of an Indemnified Person if copies of
the Prospectus were timely delivered to the Placement Agent and a copy of the
Prospectus was not sent or given by or on behalf of the Placement Agent to such
person, if required by law so to have been delivered, at or prior to
12
<PAGE> 13
the delivery to the Placement Agent by such person of a Subscription Agreement
if the Prospectus would have cured the defect giving rise to such loss, claim,
damage, liability or expense.
(b) The Placement Agent agrees to indemnify the Company, the Trust
and their respective controlling persons, affiliates, directors, officers,
agents and employees (each, a "Company Indemnified Person") and hold them
harmless against any losses, claims, damages, liabilities or legal or other
expenses which the Company Indemnitees may become subject, arising out of or
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, Prospectus, or Subscription
Agreement, or any omission or alleged omission to state therein a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only, in each such case, with respect
to information furnished to the Company or the Trust by the Placement Agent
expressly for use in the Registration Statement or Prospectus, (ii) any untrue
statement or alleged untrue statement of a material fact made by the Placement
Agent or its agents that is not based on information included in the
Registration Statement or Prospectus or authorized in writing by the Company, or
any omission or alleged omission by the Placement Agent or its agents to state a
material fact necessary to make a statement by the Placement Agent or its agent
that is not based on information included in the Registration Statement or
Prospectus or authorized in writing by the Company, in light of the
circumstances in which it was made, not misleading, or (iii) any action by the
Placement Agent or its agents in violation of state securities laws unless the
Company shall have approved the offer and/or sale of Preferred Securities in
such state.
(c) Promptly after receipt by an Indemnified Person or a Company
Indemnified Person under this Section 7 of notice of the commencement of any
action, such Indemnified Person or Company Indemnified Person will, if a claim
in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any Indemnified Person or Company Indemnified
Person under this Section 7, except to the extent that the indemnifying party is
actually prejudiced thereby.
(d) The Company agrees that the indemnification and reimbursement
commitments set forth in this Section 7: (i) shall apply whether or not any
Indemnified Person or Company Indemnified Person, as applicable, is a formal
party to any such lawsuit, claim or other proceeding and that such Indemnified
Person or Company Indemnified Person, as applicable, is entitled to retain
separate counsel of its choice in connection with any of the matters to which
such commitments relate, (ii) are in addition to any liability that the Company
or the Placement Agent, as applicable, may otherwise have to any Indemnified
Person or Company Indemnified Person, as applicable, and (iii) shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company and all Indemnified Persons or Company
Indemnified Person, as applicable. The Company agrees that, unless a final
judicial determination is made to the effect specified in the proviso to clause
(ii) in Section 7(a) any settlement of a lawsuit, claim or other proceeding
against the Company arising out of the transactions contemplated by this
Agreement which is entered into by the Company shall include a release from the
party bringing such lawsuit,
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<PAGE> 14
claim or other proceeding of each Indemnified Person, which release shall be
reasonably satisfactory to the Placement Agent.
(e) The Company and the Placement Agent agree that if such
indemnification or reimbursement sought pursuant to this Section is finally
judicially determined by a court of competent jurisdiction to be unavailable to
an Indemnified Person or Company Indemnified Person, then, each indemnifying
party shall contribute to the losses, claims, damages, liabilities and expenses
of the Indemnified Person or Company Indemnified Person for which such
indemnification or reimbursement is held unavailable (i) in such proportion as
is appropriate to reflect the relative benefits to the Company, on one hand, and
the Placement Agent on the other, in connection with the transactions to which
such indemnification or reimbursement relates, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as appropriate to reflect not only the relative benefits referred to
in clause (i) but also the relative faults of the Company, on the one hand, and
the Placement Agent on the other, as well as any other equitable considerations;
provided, however, that in no event shall the amount to be so contributed by the
Placement Agent exceed the amount of the Placement Fee actually received by the
Placement Agent hereunder.
8. Survival Clause.
The respective indemnities, agreements, representations, warranties and
other statements of the Company, the Trust, and the Placement Agent, as set
forth in this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of the Placement Agent, any officer or member of the Placement Agent or
any controlling person of the Placement Agent, or the Company, or any
shareholder of the Company, and shall survive any termination of this Agreement
and the receipt of any payment for the Preferred Securities.
9. Commencement Date, Term and Termination of this Agreement.
(a) This Agreement shall become effective as of the date first
above written.
(b) Except for the provisions of Sections 5 and 7, which will
remain in effect regardless of such termination, (i) the Company and the Trust
shall have the right to terminate this Agreement any time during the Offering
Period upon notice thereof to the Placement Agent if any of the Placement
Agent's representations or warranties hereunder shall be found to have been
materially incorrect or misleading, or the Placement Agent shall fail, refuse or
be unable to perform any of its agreements hereunder, and (ii) the Placement
Agent shall have the right to terminate this Agreement at any time during the
Offering Period upon notice thereof to the Company, if any, of the Company's
representations or warranties hereunder shall be found to have been materially
incorrect or misleading or the Company shall fail, refuse or be unable to
perform any of its agreements hereunder or if the Registration Statement or
Prospectus shall have been amended or supplemented despite the objection of the
Placement Agent to such amendment or supplement or if there shall have been such
material change in the condition or prospects of the Company or in the condition
of securities
14
<PAGE> 15
markets generally the effect of which in the reasonable judgment of the
Placement Agent makes it impracticable to proceed with the offering and sale of
the Preferred Securities.
(c) This Agreement shall terminate, except for Sections 5 and 7,
automatically on the Termination Date, unless extended to a later date by mutual
written agreement of the parties hereto.
10. Notices.
(a) All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and mailed or delivered:
<TABLE>
<S> <C>
To the Placement Agent at: Morgan Keegan & Company, Inc.
Morgan Keegan Tower
50 Front Street
Memphis, Tennessee 38103
Attention: David Howard
To the Company or the Trust: Franklin Financial Corporation
230 Public Square
Franklin, Tennessee 37064
Attention: Richard E. Herrington, President
</TABLE>
(b) Notice shall be deemed given by a party to another party two
business days after mailing in the United States mail, certified with return
receipt requested, to the addresses provided above (or to any other address
hereafter given by a party for notice to that party), or upon receipt of notice
by a party when given by any other method, such as personal delivery,
telecopier, or overnight service.
11. Severability.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.
12. Entire Agreement; Amendments.
The parties to this Agreement acknowledge that they have read this
Agreement and agree that this Agreement and any appendices hereto constitute the
complete and exclusive statement of the understanding between the parties with
respect to the subject matter hereof. This Agreement supersedes any and all
other communication between the parties, whether written or oral. This Agreement
may not be amended or modified except in writing signed by each of the parties
hereto.
15
<PAGE> 16
13. Governing Law; Waiver of Jury Trial.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Tennessee. Each of the parties hereto expressly waives
all right to trial by jury in any action or proceeding arising out of this
Agreement.
14. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same document. In making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart executed by
the party against whom enforcement of this Agreement is sought.
15. Parties and Successors.
This Agreement shall be binding upon and inure solely to the benefit of
the Company, the Trust and the Placement Agent and, to the extent provided in
Section 7 hereof, each person who controls the Company, the Trust or the
Placement Agent, any affiliate, director, officer or employee or agent of the
Placement Agent or of the Company and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any rights under or by virtue of this Agreement. No purchaser of any
Preferred Securities shall be deemed a successor or assign merely by reason of
such purchase.
*****
16
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
FRANKLIN FINANCIAL CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
FRANKLIN CAPITAL TRUST I
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MORGAN KEEGAN & COMPANY, INC.
By:
---------------------------------------
David Howard, Senior Vice President
17
<PAGE> 18
EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, executed this ____ day of ____________,
2000, by and among Morgan Keegan & Company, Inc. (the "Placement Agent"),
Franklin Financial Corporation (the "Corporation"), Franklin Capital Trust I
(the "Trust") and First Tennessee Bank National Association (the "Escrow
Agent").
W I T N E S S E T H:
WHEREAS, the Placement Agent is offering for sale on behalf of
the Trust and the Corporation a minimum of $10,000,000 and a maximum of
$16,000,000 in preferred securities of the Trust, liquidation value $1,000 per
security (the "Preferred Securities"); and
WHEREAS, the Placement Agent, the Corporation, and the Trust
are each desirous of entering into this Escrow Agreement with the Escrow Agent
for the receipt and disposition of the subscription funds for the Preferred
Securities of the Corporation;
NOW, THEREFORE, in consideration of the premises and mutual
covenants and conditions contained herein, the parties hereby agree as follows:
1. PAYMENT OF ESCROW ACCOUNT. All payments for the
Preferred Securities will be held by the Escrow Agent under this Escrow
Agreement. The Placement Agent will hold the subscription agreements and a copy
of the fully executed signature page of the Subscription Agreement showing the
subscriber's name(s), social security number(s)/tax identification number,
address, jurisdiction, capacity of ownership, and signature(s) of the
subscriber(s). Immediately upon collection of payments for subscriptions, the
Placement Agent will deliver the payments and the originally executed
Subscription Agreements to the Escrow Agent. Escrow Agent shall deposit such
payments in an account (the "Escrow Account") and invest and reinvest such funds
in the permitted investments ("Permitted Investments") described below. The
earnings thereon shall inure to the benefit of and be distributed to the
Corporation or the subscribers as hereinafter provided, with any taxes to be
reported on interest earned to the tax identification number of the Corporation
or the subscribers, as appropriate. A Permitted Investment shall mean the
following, and no other:
(i) certificates of deposit or time deposits constituting direct
obligations of any bank, which deposits are fully insured by the
Federal Deposit Insurance Corporation; or
(ii) short-term bonds, notes, certificates of indebtedness, treasury
bills, or other securities constituting direct obligations of the
United States of America.
<PAGE> 19
Any Permitted Investment shall be made only as permitted by law and for
a period not longer than is specified by law or through the date on which the
Escrow Agent, upon consultation with the Corporation, determines that the
subscription amounts and all interest accrued thereon will be needed for the
purposes for which such investment is held.
2. DISBURSEMENT OF ESCROW ACCOUNT. The purpose of the
Escrow Account is to hold the funds and subscriptions of the subscribers. At the
closing of the offering of the Preferred Securities, as described in the Selling
Agency Agreement by and among the Placement Agent, the Corporation, and the
Trust, the Escrow Agent will deliver documents and funds held by it to the
Trust, less any fees due to Escrow Agent. The Placement Agent, the Corporation,
and the Trust shall certify to the Escrow Agent that the closing of the offering
of the Preferred Securities has occurred. If requests are made to make payments
that are greater than the amount in the Escrow Account, notice of any deficiency
will be given by the Escrow Agent to the Corporation, and the Escrow Agent will
not make any payments until either the deficiency is eliminated or specific
written instructions are received from the Corporation on paying out the
remaining funds.
3. TERMINATION OF ESCROW AGREEMENT; EXTENSION OF ESCROW
AGREEMENT. This Escrow Agreement shall terminate on the earlier of the date that
all funds held in the Escrow Account are disbursed under the terms of Item 2 of
this Escrow Agreement or upon the termination of the offering of Preferred
Securities, whichever date is earlier. If the offering of Preferred Securities
is terminated, the Escrow Agent will return all amounts in the Escrow Account to
the subscribers of the Preferred Securities of the Corporation, with interest
earned and will return all executed subscription agreements to the Placement
Agent. Distributions will be directed by the Corporation, or its designated
representative. This Escrow Agreement may be extended until such time as may be
agreed upon between the parties hereto. Such extension shall be evidenced in
writing signed by the parties hereto.
4. DUTIES OF ESCROW AGENT. The Corporation agrees that
the following provisions shall control with respect to the rights, duties,
liabilities, privileges and immunities of the Escrow Agent:
(a) The Escrow Agent is not responsible or
liable in any manner whatsoever for the sufficiency,
correctness, genuineness or validity of the subject matter of
payments into the Escrow Account, or any part thereof, or for
the form of execution thereof, or for the identity or
authority of any person executing or depositing the same.
(b) The Escrow Agent shall have no liability
hereunder except for the performance by it in good faith of
the acts to be performed hereunder and except for its own
willful misconduct or gross negligence.
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<PAGE> 20
(c) The Escrow Agent shall be entitled to rely
on any written notice, demand, certificate or document which,
in good faith, it believes to be genuine.
(d) In the event of conflicting demands upon the
Escrow Agent, it may withhold performance under these
instructions until the said conflicting demands are withdrawn
or until the rights of the respective parties shall have been
finally settled by a court adjudication or otherwise.
(e) The Escrow Agent shall provide to the
Corporation, at the address indicated below or at such other
address provided by the Corporation, statements indicating the
activity in the Escrow Account upon request.
(f) The Escrow Agent shall act only in the
capacity of an escrow agent whose duties are limited solely to
those set forth herein. The Escrow Agent shall have no duties
or responsibilities with regard to the offer or sale of
Preferred Securities by the Corporation other than those set
forth herein.
5. RESIGNATION. The Escrow Agent may resign at any time
by giving 10 days' written notice thereof to the Corporation. If the Escrow
Agent shall cease to act as Escrow Agent, then the Corporation, with consent of
the Placement Agent, which shall not be unreasonably withheld, shall appoint its
successor or any other successor. If no successor is appointed, the Escrow Agent
may deposit the Escrow Account with an appropriate court with proper
jurisdiction.
6. INDEMNIFICATION OF ESCROW AGENT. The Corporation
agrees to indemnify, defend, and hold harmless Escrow Agent from any and all
liability of any kind whatsoever including claims and expenses arising by virtue
of its services as Escrow Agent hereunder, except for liabilities due to the
Escrow Agent's gross negligence or willful misconduct.
7. DISPUTES. In the event of any disputes or questions
as to the duties of the Escrow Agent hereunder, it shall be entitled, at its
option, without liability to any person having a claim to the property held by
it, to refuse to perform any act other than to retain said property held by it,
to refuse to perform any act other than to retain said property in its then
condition until the Escrow Agent's obligations hereunder have been finally
determined by arbitration or in a court of competent jurisdiction, or until it
shall have received appropriate instructions in writing signed by the
Corporation.
8. COMPLETE AGREEMENT. This Escrow Agreement sets forth
exclusively the duties of the Escrow Agent with respect to any and all matters
pertinent hereto, and no implied duties or obligations shall be read into this
Escrow Agreement against the Escrow Agent.
- 3 -
<PAGE> 21
9. NOTICES. All notices, instructions and requests
required or permitted to be given or received under the provisions hereof shall
be deemed to have been fully given or received if delivered or mailed, by
registered or certified mail, postage prepaid, to:
- 4 -
<PAGE> 22
<TABLE>
<S> <C>
If to Corporation or the Trust: Franklin Financial Corporation
230 Public Square
Franklin, Tennessee 37064
Attn: Richard E. Herrington, President
If to Escrow Agent: First Tennessee Bank National Association
4385 Poplar Avenue
Memphis, Tennessee 38117
Attn: Dennis Gillespie
If to Placement Agent: Morgan Keegan &Company, Inc.
Morgan Keegan Tower
50 Front Street
Memphis, Tennessee 38103
Attention: David Howard
</TABLE>
11. PARTIES IN INTEREST. This Escrow Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns.
12. COUNTERPARTS. This Escrow Agreement may be executed
in one or more counterparts, with the same effect as if each one were an
original.
13. SEVERABILITY. If any provision of this Agreement
shall be held or deemed to be invalid, inoperative or unenforceable as applied
in any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of public policy, or
for any other reason, such circumstances shall not have the effect of rendering
the provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatever. The invalidity of
any one or more phrases, sentences, clauses or Sections in this Agreement
contained shall not affect the remaining portions of this Agreement, or any part
thereof.
14. CAPTIONS. The captions and headings in this Agreement
are for convenience of reference only and in no way define, limit or describe
the scope or intent of any provisions or sections of this Agreement.
15. GOVERNING LAW. This Agreement shall be governed
exclusively by and construed in accordance with the applicable laws of the State
of Tennessee.
- 5 -
<PAGE> 23
16. ESCROW AGENT FEES. The Escrow Agent fees are
$1,500.00 per month for this service, plus out-of-pocket expenses, if any.
- 6 -
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Escrow
Agreement on the day and year first above written.
ESCROW AGENT:
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By:
---------------------------------------
Title:
---------------------------------------
FRANKLIN FINANCIAL CORPORATION:
By:
---------------------------------------
Title:
---------------------------------------
FRANKLIN CAPITAL TRUST I:
By:
---------------------------------------
Title:
---------------------------------------
MORGAN KEEGAN & COMPANY, INC.
By:
---------------------------------------
Title:
---------------------------------------
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