EXPLANATORY NOTE
On August 15, 2020, FB Financial Corporation, a Tennessee corporation (“FB Financial”) acquired Franklin Financial Network, Inc., a Tennessee corporation (“Franklin”). The acquisition occurred pursuant to a series of mergers provided for in the Agreement and Plan of Merger, dated as of January 21, 2020 (the “Merger Agreement”), by and among FB Financial, Paisley Acquisition Corporation, a Tennessee corporation and direct, wholly-owned subsidiary of FB Financial (“Merger Sub”), and Franklin, as more fully described below.
| Item 1.01. | Entry into a Material Definitive Agreement. |
Effective upon the occurrence of the Merger, FB Financial and U.S. Bank, National Association, as Trustee (the “Trustee”) entered into a second supplemental indenture (the “Second Supplemental Indenture”) to the Indenture, dated as of March 31, 2016, as supplemented by that certain First Supplemental Indenture, dated as of March 31, 2016, by and between Franklin and the Trustee (the “Indenture”), pursuant to which Franklin issued $40,000,000 of its Fixed-to Floating Rate Subordinated Notes due 2026. Pursuant to the Second Supplemental Indenture, FB Financial assumed Franklin’s obligations under the Indenture.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On August 15, 2020, FB Financial completed its previously announced merger with Franklin. Pursuant to the terms of the Merger Agreement, Merger Sub was merged with and into Franklin (the “Merger”) with Franklin surviving the merger as a wholly-owned subsidiary of FB Financial. Immediately following the Merger, Franklin merged with and into FB Financial, with FB Financial continuing as the surviving corporation (the “Upstream Merger”). Immediately following the Upstream Merger, Franklin Synergy Bank, a Tennessee state-chartered bank and a wholly owned subsidiary of Franklin (“Franklin Synergy”), merged with and into FirstBank, a Tennessee state-chartered bank and a wholly owned subsidiary of FB Financial (“FirstBank”), with FirstBank continuing as the surviving bank (the “Bank Merger,” and, together with the Merger and the Upstream Merger, the “Mergers”).
At the Effective Time (as defined in the Merger Agreement), each issued and outstanding share of common stock, no par value, of Franklin (the “Franklin Common Stock”) was converted into the right to receive (i) 0.9650 shares of common stock, par value $1.00 per share, of FB Financial (“FB Financial Common Stock”); and (ii) $2.00 in cash (the “Per Share Cash Consideration” and, collectively with the FB Financial Common Stock issued pursuant to the preceding clause (i), the “Merger Consideration”).
At the Effective Time, (i) each option to purchase shares of Franklin Common Stock (a “Franklin Option”) that was outstanding and unexercised immediately prior to the Effective Time was converted automatically into right to receive the Merger Consideration in respect of each Net Share (as defined in the Merger Agreement) of Franklin Common Stock outstanding under the applicable Franklin Option; (ii) each award of a share of Franklin Common Stock subject to vesting, repurchase or other lapse restriction (a “Franklin Restricted Stock Award”) that was outstanding as of December 31, 2019, and remained outstanding as of immediately prior to the Effective Time vested and converted automatically into the right to receive the Merger Consideration in respect of each share underlying the applicable Franklin Restricted Stock Award; and (iii) each restricted stock unit award in respect of shares of Franklin Common Stock (a “Franklin RSU Award”) that was outstanding as of December 31, 2019, and remained outstanding as of immediately prior to the Effective Time vested and was converted automatically into the right to receive the Merger Consideration in respect of each share underlying the applicable Franklin RSU Award.
Each Franklin RSU Award that was granted on or after December 31, 2019 and was outstanding as of immediately prior to the Effective Time was, at the Effective Time, converted automatically into a restricted stock unit award in respect of a number of shares of FB Financial Common Stock (rounded to the nearest whole share) equal to the product of (a) the total number of shares of Franklin Common Stock subject to the Franklin RSU Award immediately prior to the Effective Time multiplied by (b) the Stock Award Exchange Ratio (as defined in the Merger Agreement), all on the same terms and conditions (including vesting terms) as applied to the corresponding Franklin equity award immediately prior to the Effective Time.
The foregoing description of the Mergers and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
